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The financial statements on pages 131 to 234 were approved by the Board of directors on 10 March 2026 and were signed on their behalf by:
Sir John Kingman
Chair
Ant\u00f3nio Sim\u00f5es
Group Chief Executive Officer
Andrew Kail
Group Chief Financial Officer
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"ifrs-full:CashAndCashEquivalentsIfDifferentFromStatementOfFinancialPosition", "entity": "scheme:213800JH9QQWHLO99821", "period": "2026-01-01T00:00:00", "unit": "iso4217:GBP" } }, "f-558": { "value": "16657000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:CashAndCashEquivalentsIfDifferentFromStatementOfFinancialPosition", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00", "unit": "iso4217:GBP" } }, "f-559": { "value": "1240000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:CashAndCashEquivalentsClassifiedAsPartOfDisposalGroupHeldForSale", "entity": "scheme:213800JH9QQWHLO99821", "period": "2026-01-01T00:00:00", "unit": "iso4217:GBP" } }, "f-560": { "value": "0.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:CashAndCashEquivalentsClassifiedAsPartOfDisposalGroupHeldForSale", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00", "unit": "iso4217:GBP" } }, "f-561": { "value": "17098000000.0", "decimals": -6, 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1. Basis of preparation and accounting policies
Legal & General Group Plc, a public limited company incorporated and domiciled in England and Wales, operates across three broad
business areas of institutional retirement, asset management and retail (insurance and retirement), through its subsidiaries and associates
in\u00a0the United Kingdom (UK), the United States, Bermuda and other countries throughout the world.
(i) Basis of preparation
The Group financial statements, which comprise the information on pages 131 to 234, except the information disclosed as being unaudited,
have been prepared in accordance with UK-adopted international accounting standards, comprising International Accounting Standards
and\u00a0IFRS as issued by the International Accounting Standards Board (IASB) and related interpretations issued by the IFRS Interpretations
Committee. Endorsement is granted by the UK Endorsement Board (UKEB). The Group financial statements have been prepared under the
historical cost convention, as modified by the revaluation of investment property, financial assets at fair value through other comprehensive
income and certain assets and financial liabilities (including derivative instruments) at\u00a0fair value through profit or loss.
The Group has selected accounting policies which state fairly its financial position, financial performance and cash flows for a reporting
period. The accounting policies have been consistently applied to all years presented unless otherwise stated.
Financial assets and financial liabilities are disclosed gross in the Consolidated Balance Sheet unless a legally enforceable right of offset
exists and there is an intention to settle recognised amounts on a net basis. Income and expenses are not offset in the Consolidated Income
Statement unless required or permitted by any accounting standard or International Financial Reporting Interpretations Committee (IFRIC)
interpretation, as detailed in the applicable accounting policies of the Group.
(ii) Going concern
The Group\u2019s business activities, together with the factors likely to affect its future development, performance and position in the current
economic environment are set out in this Annual report and accounts. The financial position of the Group, its cash flows, liquidity position and
borrowing facilities are described in these consolidated financial statements. Principal risks and uncertainties are detailed on pages 42 to 46
The directors have made an assessment of the Group\u2019s going concern, considering both the current performance and the outlook for a period
of at least, but not limited to, 12 months from the date of approval of these consolidated financial statements, using the information available
up to the date of issue of this Annual report and accounts.
The Group manages and monitors its capital and liquidity and applies various stresses, including adverse inflation and interest rate scenarios,
to those positions to understand potential impacts from market downturns. Our key sensitivities and the impacts on our capital position from
a range of\u00a0stresses are disclosed in Note 28 Management of capital resources (this note is unaudited). These stresses do not give rise to any
material uncertainties over the ability of\u00a0the Group to continue as a going concern. Based upon the available information, the directors consider that
the Group has the plans and resources to manage its business risks successfully and that it remains financially strong and well diversified.
Having reassessed the principal risks and uncertainties (both financial and operational) in light of the current economic environment, as detailed
on pages 42 to 46, the directors are confident that the Group and Company will have sufficient funds to continue to meet its liabilities as they
fall due for a period of, but not limited to, 12 months from the date of approval of the financial statements and therefore have considered it
appropriate to adopt the going concern basis of accounting when preparing the financial statements.
(iii) Impact of the sale of the Group's US insurance entity on financial reporting
On 7 February 2025 the Group announced that it had agreed to sell its US insurance entity, comprising its US protection and US pension
risk transfer (PRT) businesses, through the disposal of its entire shareholding in Legal & General America Inc., the parent company of Banner
Life and William Penn, to Meiji Yasuda Life Insurance Company (Meiji Yasuda), a Japanese mutual life insurer, for $2.3bn. The transaction
completed on 2\u00a0February 2026 for proceeds of $2.6bn (which reflects net asset transfers and the impact of business performance since
1 January 2025).
Following completion, Meiji Yasuda became the owner of the Group's US protection business and now holds a 20% economic interest in
its US PRT business. The Group has retained 80% of existing and new PRT business through a new reinsurance agreement with Meiji
Yasuda.
The transaction has had the following impacts on financial reporting:
\u2022 In accordance with IFRS 5, 'Non-current Assets Held for Sale and Discontinued Operations' the Group's US insurance entity qualifies for
classification and measurement as a held for sale disposal group. This includes the entirety of the US protection and US PRT businesses.
\u2022 The disposal group also meets the definition of discontinued operations. As a consequence, the results of the disposal group for the year
ended 31 December 2025 have been presented in separate lines within the Group Consolidated Income Statement and Consolidated
Statement of Comprehensive Income. Comparative information has been re-presented accordingly in line with IFRS 5 requirements.
\u2022 The composition of the Group's reportable segments in accordance with IFRS 8 'Operating Segments', has changed. In preparation for the
completion of the disposal, the results related to the Group's US protection business and 20% of those related to the US PRT business have
now been reported to key decision makers separately. As a consequence, they are no longer included in the results of the Insurance and
Institutional Retirement segments and are now presented separately as \"Non-retained US business\". Exposure to the remaining 80% of the
US PRT business will be retained by way of the new reinsurance agreement and therefore these results continue to be reported within
Institutional Retirement. Segmental information in relation to the prior year has been re-presented where applicable to reflect these changes.
\u2022 The calculation of core operating profit and core operating earnings per share (core operating EPS), two of the Group\u2019s Alternative
Performance Measures (APMs), has been updated. Non-retained US business is no longer considered to be key to achieving the Group\u2019s
strategy and therefore, in line with the definition of core operating profit and core operating EPS, its results are now excluded from their
calculation. Prior year comparatives have been restated accordingly. As a result of the change, core operating profit for the year ended
31 December 2024 has decreased by \u00a382m (from \u00a31,616m to \u00a31,534m). Core operating EPS for the year ended 31 December 2024
has decreased by 1.03pps (from 20.23pps to 19.20pps).
(iv) New standards, interpretations and amendments to published standards that have been adopted by the Group
The Group has applied Amendments to IAS 21, \u2018The Effects of Changes in Foreign Exchange Rates\u2019: \u2018Lack of Exchangeability' for the first
time in the year commencing 1 January 2025, which did not have a material impact on its consolidated financial statements.
(v) Standards, interpretations and amendments to published standards which are not yet effective
Amendments to IFRS 9, \u2018Financial Instruments\u2019 and IFRS 7, \u2018Financial Instruments: Disclosures\u2019: \u2018Amendments to the Classification and
Measurement of Financial Instruments\u2019
These amendments, issued in May 2024, provide the following:
\u2022 clarification around the date of recognition and derecognition of some financial assets and liabilities, with a new exception for some
financial liabilities settled through an electronic cash transfer system
\u2022 clarification and guidance for assessing whether a financial asset meets the solely payments of principal and interest (SPPI) criterion
\u2022 new disclosure requirements for certain instruments with contractual terms that can change cash flows (such as some financial
instruments with features linked to the achievement of environment, social and governance targets)
\u2022 an update to the disclosures for equity instruments designated at fair value through other comprehensive income (FVOCI).
The amendments are effective for annual reporting periods beginning on or after 1 January 2026. These amendments are not expected
to give rise to a material impact on the Group\u2019s consolidated financial statements.
Annual improvements to IFRS Accounting Standards \u2013 Volume 11
The IASB issued its annual improvements in July 2024, which include a collection of minor amendments to accounting standards, applicable
for annual reporting periods beginning on or after 1 January 2026. These are not expected to give rise to a material impact
on the Group\u2019s consolidated financial statements.
IFRS 18, \u2018Presentation and Disclosure in Financial Statements\u2019
IFRS 18, issued in April 2024, will replace IAS 1, \u2018Presentation of Financial Statements\u2019. IFRS 18 introduces new requirements for
presentation within the income statement, including specified totals and subtotals, which aim at increasing comparability of the
financial performance of similar entities, as well as provide more relevant information and transparency to users.
The standard is effective for reporting periods beginning on or after 1 January 2027, with earlier application permitted. The Group is currently
assessing the impacts of the amendments on the consolidated and Company financial statements, in particular around the presentation of its
results within the Consolidated Income Statement and the definition and disclosure of management-defined performance measures.
IFRS 19, \u2018Subsidiaries without Public Accountability: Disclosures\u2019
IFRS 19, issued in May 2024, allows for certain eligible subsidiaries of parent entities that report under IFRS Accounting Standards to apply
reduced disclosure requirements. IFRS 19 is effective for reporting periods beginning on or after 1 January 2027, with early application
permitted, subject to UK endorsement. The Group is not eligible to apply IFRS 19.
(vi) Critical accounting judgements and the use of estimates
The preparation of the financial statements includes the use of estimates and assumptions which affect items reported in the Consolidated
Balance Sheet and Consolidated Income Statement and the disclosure of contingent assets and liabilities at the date of the financial
statements. Although these estimates are based on management\u2019s best knowledge of current circumstances and future events and actions,
material adjustments could be made to the carrying amounts of assets and liabilities within the next financial year. The Audit Committee
reviews the reasonableness of judgements associated with and the application of material accounting policies. The significant accounting
matters considered by the Audit Committee in respect of the year ended 31 December 2025 are included within the Audit Committee report
on page 69.
The major areas of critical accounting judgement on policy application are considered below:
Insurance and investment contract liabilities (Notes 22 and 23): Product classification and the assessment of the significance of\u00a0insurance
risk transferred to the Group in determining whether a contract should be accounted for as an insurance or\u00a0investment\u00a0contract
Contracts which transfer significant insurance risk to the Group are classified as insurance contracts. Contracts that transfer financial risk
(e.g.\u00a0change in interest rate or security price) to the Group but not significant insurance risk are classified as investment contracts.
Judgement is required in order to assess the significance of the transfer of insurance risk within a contract. This assessment is based
on whether the occurrence of an insured event could cause the Group to make significant additional payments, i.e. if the occurrence
of the event causes significantly higher cash out flows for the Group than its non-occurrence.
Certain contracts, which are both insurance and investment, can contain discretionary features representing the contractual right to receive
additional benefits as a supplement to guaranteed benefits under certain conditions, being:
\u2022 that the additional benefits are a significant portion of the total contractual benefits
\u2022 the timing and amount of the additional benefits is at the discretion of the Group
\u2022 that the additional benefits are contractually dependent upon the performance of an entity, fund or specified pool of assets.
Insurance contracts and investment contracts with such discretionary participation features are accounted for under IFRS 17, while
investment contracts without discretionary participation features are accounted for as financial instruments under IFRS 9.
Judgement is therefore required in order to establish whether any additional benefits in an insurance or investment contract meet the above
requirements for being considered discretionary participation features.
Consolidation (Notes 41-43): Assessment of whether the Group controls underlying entities and should therefore consolidate them.
The assessment takes account of various criteria, including decision-making ability, equity holding and the rights to a variable return from
the\u00a0entity.
Control arises when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect
those returns through its power over the entity.
For operating entities this generally accompanies a shareholding of 50% or more in the entity. Subsidiaries that are consolidated where the
Group owns less than 50% of the ordinary share capital (structured entities), are consolidated based on an assessment of control normally
arising from special rights attaching to the class of share owned, other contractual arrangements and factors such as the purpose of the
investee, the nature of its relevant activities, voting rights (including potential voting rights) and substantive and protective rights.
The Group invests in various fund and unit trust entities where it also acts as the asset manager to those entities. In these instances, in
determining whether the Group controls the entities, the assessment focuses on the aggregate economic interests of the Group (direct
interest and expected management fees) and on whether the Group acts as a principal or agent. This includes an assessment of the removal
rights of other investors (their practical ability to allow the Group not to control the fund). Additionally, holdings in such investments can
fluctuate on a daily basis according to\u00a0the participation of the Group and other investors in them. As a result, in determining control, we look
at an assessment of these factors over a\u00a0longer period to mitigate the impact of daily fluctuations which do not reflect the wider facts and
circumstances of the Group\u2019s involvement. This\u00a0is performed in line with the following principles:
\u2022 where the entity is managed by a Group asset manager and the Group\u2019s ownership holding in the entity exceeds 50%, the Group is judged
to\u00a0have control over the entity
\u2022 where the entity is managed by a Group asset manager and the Group\u2019s ownership holding in the entity is between 30% and 50%, the
facts and\u00a0circumstances of the Group\u2019s involvement in the entity are considered, including the rights to any fees earned by the asset
manager from\u00a0the entity, in forming a judgement as to whether the Group has control over the entity
\u2022 where the entity is managed by a Group asset manager and the Group\u2019s ownership holding in the entity is less than 30%, the Group is
judged to\u00a0not have control over the entity, but again the facts and circumstances of the Group\u2019s involvement in the entity are considered.
The following sets out information about the critical accounting assumptions made by the Group about the future and other major sources
of\u00a0estimation uncertainty at the end of the reporting period, that have a significant risk of resulting in a material adjustment to the carrying
amounts of assets and liabilities within the next financial year:
Valuation of insurance contract liabilities (Notes 20-22)
The key judgements around the valuation of insurance contract liabilities relate to the following assumptions:
\u2022 determination of the longevity, mortality and morbidity assumptions used in the calculation of the insurance contract liabilities; the
assumptions for the rate of future longevity, mortality and morbidity are based on the Group\u2019s internal experience and judgements
about how experience may vary in the future. This assessment takes into account market benchmarking, internal experience studies
and independent industry data. The long-term assumptions are adjusted to reflect the Group\u2019s view on the effects of the Covid-19
pandemic on claims experience in the medium to long-term, informed by emerging experience and industry studies
\u2022 determination of the directly attributable expense assumptions used in the calculation of the insurance liabilities. These represent the
expected future costs that relate directly to the fulfilment of the underlying insurance policies and are based on management\u2019s best
estimate of these future costs and on an appropriate allocation between servicing new and existing business
\u2022 determination of valuation interest rates used to discount the liabilities, which are sensitive to the assumptions made, for example, on
credit default of the backing assets. These assumptions take into account consideration of market experience and historic internal data.
The valuation interest rate is also sensitive to the selection of the reference portfolio of assets chosen to back the liabilities
\u2022 determination of the compensation required for bearing the uncertainty about the amount and timing of the cash flows arising from
non-financial risks as insurance contracts are fulfilled, in the calculation of the risk adjustment
\u2022 determination of the weighting of the coverage units, used to calculate the CSM amortisation in the year, between the payment phase
and\u00a0the\u00a0deferral phase for deferred annuities. Judgement is required to combine the different coverage units so that they fairly reflect
the\u00a0services\u00a0provided
\u2022 determination of the transition date CSM under IFRS 17 incorporated judgement. In particular, judgements made in the calculation of the
CSM\u00a0for portfolios transitioned using the fair value approach at 1 January 2022 continue to be a component of the current valuation of
the\u00a0CSM\u00a0until those portfolios expire.
Note 21 includes a sensitivity analysis on post-tax Group profit and Group equity to reasonable alternative assumptions.
Valuation of unquoted illiquid assets and investment property (Note 13)
Determination of fair value of unquoted and illiquid assets and investment property involves judgements in model valuations, through the
incorporation of both observable and unobservable market inputs, which include assumptions that lead to the existence of a range of
plausible valuations for financial assets.
In assessing asset valuation, in line with applicable standards and guidance, the Group has both projected the short-term impact on earnings
and\u00a0cash flows of the current market volatility, while continuing to review the assets\u2019 ability to deliver longer term returns aligned to their
investment cases.
Note 21 includes a sensitivity analysis on the fair value of unquoted illiquid assets and investment property to reasonable alternative assumptions.
(vii) Consideration of climate change
The Group recognises emerging risks from both climate change and nature loss and the interrelationship between our climate and the
natural world. Climate change is the Group\u2019s most material sustainability issue, but the Group continues to develop its understanding
of its impacts and dependencies on nature, concurrently with its consideration of the impacts from climate change.
The Group is exposed to climate change through two broad categories: transition risks from the move to a low-carbon economy and the
impact this has on asset valuation and the economy; and physical risks from the impact on asset holdings as a result of severe weather
events and longer-term shifts in climate.
The Group has integrated climate risk management into its governance framework and has carried out a detailed assessment of how we
could expect climate risk to emerge across our business model. The Group risk mitigation strategy includes setting portfolio carbon intensity
targets, integrating carbon controls into the investment processes through stock exclusions and high carbon escalation, corporate engagement
and implementing high energy efficiency standards into the Group\u2019s directly owned commercial property and housing businesses.
The Group is committed to net zero, promoting a 1.5\u00b0C \u2018Paris-aligned transition\u2019. In order to meet its environmental goals, the Group has set
for itself a\u00a0number of targets and commitments, clearly linked with its business strategy and risk management controls. These are based on
the three key areas of our Group-wide activity, as an asset owner, an asset manager and in our own operations. Metrics and targets have
been defined around the Group\u2019s operational carbon footprint, investment portfolio economic carbon intensity and implied portfolio temperature
alignment. These are being targeted through the decarbonisation of the Group\u2019s balance sheet, investing in the transition, development of
climate friendly investment products and focus on own operations. The Group also continues to drive greater action as an asset manager to
address financially material climate and nature risks in the real economy consistent with our fiduciary duty.
Scenario analysis is performed to help understand the strategic implications of possible climate pathways, including the key features of a
transition to a net zero economy. Plausible scenarios have been developed based on estimations of how the energy system may evolve over
the next 30 years, using the most recent carbon budgets from the Intergovernmental Panel on Climate Change\u2019s Sixth Assessment Report
(AR6) and incorporated latest data on technology costs. These include two different pathways to \u2018below 2\u00b0C\u2019 and a scenario assuming
achievement of net zero. Given the Group\u2019s long-term climate risk relates to transition risk, a fourth scenario assuming global failure to act
on climate change and emissions growth at historical rates has been modelled, but the impacts have not been applied to our portfolio. Such
impacts are driven by physical risks which tend to be highly localised and manifest further into the future and are therefore more uncertain.
However, more broadly on physical risks, our modelling capabilities allow us to assess how acute events, such as floods and storms in the
High emissions scenario, may affect asset values, operations, and long-term resilience, as considered in our investment due diligence and
valuation uncertainty analysis.
In preparing the consolidated financial statements, the Group has considered the impact of climate change and in particular the transition
to a lower carbon economy, on the valuation of the Group\u2019s assets and liabilities. In the Strategic report, with additional information in the
Group\u2019s Climate and nature report, we have set out in detail the various risks and opportunities that are created by this transition and how
they may impact the Group across various time horizons. In line with the recommendations of the Task Force on Climate-related Financial
Disclosures, we have further described the resilience of the Group\u2019s strategy, taking into consideration different climate-related scenarios, as
described above. There is no one single scenario that underpins the financial statements. The scenarios help challenge the Group\u2019s perspectives
on the future business and economic environment as a result of the transition to a lower carbon economy, including consideration of events
that may be only remotely possible. As a result, the scenarios covered are not intended to be predictions of likely future events or outcomes
and are not the basis on which the Group\u2019s consolidated financial statements have been prepared.
At the current time, the Group does not consider climate risk to represent a significant area of judgement or of estimation uncertainty.
As at 31 December 2025, no material impacts on the Group\u2019s financial position, nor on the valuation of assets or liabilities on the Group\u2019s
Consolidated Balance Sheet as a result of climate change risk have been identified. In arriving at this determination, the Group has in
particular taken into account the following areas of judgement, which we consider to be those most exposed to the potential impact of
climate change in the preparation of the financial statements:
Going concern and viability
In preparing the consolidated financial statements, the directors are required to assess the Group\u2019s ability to continue as a going concern, by
taking into account all available information related to at least 12 months from the date of their approval. Additionally, the preparation of the
viability statement takes into consideration the Group\u2019s overall business model and strategy, forecast financial strength and resilience and
the liquidity profile over the planning horizon. Climate-related matters have been considered as part of these assessments and have not
been deemed to create material uncertainties as to their conclusions or to require specific disclosure.
Valuation of Level 3 financial investments and investment property
The valuation of unquoted illiquid assets and investment property has been separately identified as an area of significant estimation
uncertainty. The assumptions used in the models underpinning these assets\u2019 valuations, such as cash flows forecasts, discount rates
and multiples, are often unobservable. Due to the need to apply significant judgements, these assumptions can be impacted by transition
risk, with climate-related inputs gaining more traction (e.g. construction methods and materials, EPC ratings, ESG credentials and climate
resilience). This is particularly relevant for the Group\u2019s Private Markets portfolio, including alternative assets. Where possible, the Group\u2019s
assets are valued using standard market pricing sources or appropriately qualified external valuers and therefore reflect current market
sentiments around climate risk. In this respect market and investor expectations have also been evolving, with greater demand towards
net zero-aligned assets and away from traditional carbon-intensive methods, impacting expected investor returns and therefore discount
rates and multiples. Exposure to the risks of climate change is minimised through rigorous assessment of potential investments and active
monitoring of the carbon intensity of the current portfolio. Additionally, investment properties are being reviewed by independent third
parties, where applicable, with regards to potential retrofitting, to help reduce carbon emissions and make them more efficient and
sustainable for the future.
Asset impairment and residual economic life
The carrying value of goodwill, intangible and certain tangible assets on the Consolidated Balance Sheet which are subject to impairment
testing\u00a0could be affected by climate change risk. For example, inventory may become obsolete or restricted, causing selling prices to decline
or\u00a0their costs of completion to increase. If, as a result, the cost of inventories is not recoverable, they would need to be written down to their
net\u00a0realisable value.
Property, plant and equipment, right-of-use assets, goodwill and intangible assets may see their recoverable amount decrease in light of
climate change and significant changes in the environment (including for example changes in regulation) in which the Group operates, where
adverse effects can represent an indication of impairment. The estimation of recoverable amount as \u2018value in use\u2019 requires an assessment of
future expected cash flows based on assumptions potentially affected by climate-related matters, particularly for goodwill and intangible
assets, which\u00a0are subject to a higher degree of judgement. Where assets are subject to amortisation or depreciation, consideration needs
to be given to\u00a0whether climate risk suggests that the residual economic life is shorter than anticipated, which would give rise to increased
charges in the income statement. Due to the nature of the Group\u2019s assets, we do not anticipate any material additional impairments or
increased amortisation and\u00a0depreciation charges to arise from climate change. Risks will continue to be monitored against judgements
and estimates used in the assessment of impairment.
Insurance contract liabilities
The Group\u2019s insurance contracts are valued using discount rates derived from the backing asset portfolios with deductions made to remove
risks\u00a0that are present in the assets but are not relevant to the insurance liability. Climate-related risks could impact on the Group\u2019s exposure
to\u00a0future credit losses which would impact on the appropriate yield deductions in the discount rate calculation and therefore the insurance
contract valuations.
Provisions and contingent liabilities
The recognition, measurement and disclosure of provisions and contingent liabilities is subject to setting assumptions around future
events and the probability of their occurrence. Climate-related matters could affect these elements, for example by requiring recognition
or disclosure of a legal obligation (e.g. levies imposed for failing climate-related targets) or of a constructive obligation (e.g. requirements
to remediate environmental damage caused by the Group\u2019s operations and investment portfolios).
Deferred tax assets
Deferred tax assets are recognised for deductible temporary differences and unused tax losses and credits, to the extent it is probable
that future taxable profit will be available, against which those amounts can be utilised. Climate-related matters could affect the Group\u2019s
estimate of future taxable profits and therefore it may be required to derecognise deferred tax assets previously on the balance sheet.
Share-based payments
The Group\u2019s performance share plans provide a direct and transparent link between executive pay and the delivery of shareholder returns
over the longer term. They are a conditional award of shares subject to a performance period of at least three years. Performance metrics
for the Group\u2019s share plans are now clearly linked to ESG metrics.
Financial instruments
Expected credit losses are required to be recognised on receivables and certain financial investments, representing the counterparty\u2019s
probability\u00a0of default over a certain time horizon. Climate-related matters may affect the Group\u2019s exposure to these losses, for example
by\u00a0negatively affecting the borrower\u2019s ability to meet their obligations, or by affecting assumptions used in the models adopted to estimate
expected credit losses.
(viii) Material accounting policies
Consolidation principles
Subsidiary undertakings
The consolidated financial statements incorporate the assets, liabilities, equity, income, expenses and cash flows of the Company and of its
subsidiary undertakings drawn up to 31 December each year. All intra-group balances, transactions, income and expenses are eliminated in full.
Subsidiaries are those entities (including special purpose entities, mutual funds and unit trusts) over which the Group directly or indirectly
has control (i.e. when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to
affect those returns through its power over the investee) (Note 42).
Business combinations are accounted for by applying the acquisition method of accounting, which requires the Group to record the
identifiable assets and liabilities of the acquired business at fair value on the date of acquisition. The excess of the fair value of acquisition
consideration over\u00a0the recorded value of the assets and liabilities of the acquired entity is recorded on the statement of financial position
as goodwill. Profits or\u00a0losses of subsidiary undertakings sold or acquired during the year are included in the consolidated results up to the
date of disposal or from the\u00a0date of gaining control.
Puttable instruments held by external parties in consolidated investment vehicles, such as unit trusts, are classified as liabilities and appear
as\u00a0Net asset value attributable to unit holders\u2019 in the Consolidated Balance Sheet.
Associates and joint ventures
Associates are entities over which the Group has significant influence but which it does not control. It is presumed that the Group has
significant influence where it has between 20% and 50% of the voting rights in the investee unless indicated otherwise. Joint ventures
are entities where the Group and other parties have joint control over their activities.
The Group has interests in associates and joint ventures (Note 41) which form part of an investment portfolio held through private equity
vehicles, mutual funds, unit trusts and similar entities. In accordance with the choice permitted by IAS 28, \u2018Investments in Associates
and Joint Ventures\u2019, these interests have been classified as fair value through profit or loss and measured at fair value within financial
investments, with changes in fair\u00a0value recognised in the Consolidated Income Statement.
Associates and joint ventures which do not form part of an investment portfolio are initially recognised in the Consolidated Balance Sheet
at\u00a0cost. Goodwill arising on the acquisition of these associates or joint ventures is included within the carrying value of those investments.
Their carrying amount is increased or decreased to reflect the Group\u2019s share of total comprehensive income after the date of the acquisition.
Where the carrying amount of an associate or joint venture is greater than its estimated recoverable amount, which is the higher of the assets
fair value less costs of disposal and value in use, it is written down immediately to its recoverable amount, with an impairment loss
recognised in the Consolidated Income Statement.
Insurance contracts
Long term insurance contracts \u2013 initial measurement
Insurance contracts are contracts which transfer significant insurance risk to the insurer at the inception of the contract. This is the case if
and\u00a0only if, an insured event could cause an insurer to make significant additional payments in any scenario, other than a scenario which
lacks commercial substance. Such contracts remain insurance contracts until all rights and obligations are extinguished or expired.
At inception, the Group separates the following components from an insurance or reinsurance contract and accounts for them as if they
were stand-alone financial instruments:
\u2022 derivatives embedded in the contract whose economic characteristics and risks are not closely related to those of the host contract
and\u00a0whose\u00a0terms would not meet the definition of an insurance or reinsurance contract as a stand-alone instrument
\u2022 distinct investment components, i.e. investment components that are not highly inter-related with the insurance components and for
which contracts with equivalent terms are sold, or could be sold, separately in the same market or the same jurisdiction.
After separating any financial instrument components, the Group separates any promises to transfer to policyholders distinct goods or
services other than insurance coverage and investment services and accounts for them as separate contracts with customers (i.e. not as
insurance contracts).
A good or service is distinct if the policyholder can benefit from it either on its own or with other resources that are readily available to\u00a0
the policyholder. A good or service is not distinct and is accounted for together with the insurance component if the cash flows and risks
associated with the good or service are highly inter-related with the cash flows and risks associated with the insurance component and
the Group\u00a0provides a significant service of integrating the good or service with the insurance component.
Recognition and level of aggregation
An insurance contract is recognised at the earliest of the following:
(a) the beginning of the coverage period
(b) the date when the first payment from a policyholder becomes due
(c) for onerous contracts, when the contract becomes onerous.
The level of aggregation determines the unit of account at which IFRS 17 calculations are performed. This is determined firstly by dividing
the business written into portfolios. Portfolios comprise groups of contracts with similar risks which are managed together. Portfolios are
further divided based on expected profitability at inception into three categories: onerous contracts, contracts with no significant risk of
subsequently becoming onerous and the remainder. IFRS 17 also requires that no group for level of aggregation purposes may contain
contracts issued more than one year apart. The insurance contract disclosures have been aggregated at the level of the major product
lines of the business, annuities and protection. This disaggregation reflects their similar main characteristics and avoids the presentation
of insignificant detail.
All of the Group\u2019s in scope insurance contracts are accounted for under the general measurement model which measures a group of
insurance contracts as the total of:
\u2022 fulfilment cash flows
\u2022 CSM representing the unearned profit the Group will recognise as it provides services under the insurance\u00a0contract.
Fulfilment cash flows
Fulfilment cash flows comprise unbiased and probability-weighted estimates of future cash flows, discounted to present value to reflect the
time value of money and financial risks, plus a risk adjustment for non-financial risk. The Group\u2019s objective in estimating future cash flows is
to determine the expected value, or the probability weighted mean, of the full range of possible outcomes, considering all reasonable and
supportable information available at the reporting date without undue cost or effort. The Group estimates future cash flows considering a
range of scenarios which have commercial substance and give a good representation of possible outcomes. The cash flows from each
scenario are probability-weighted and discounted using current assumptions.
When estimating future cash flows, the Group includes all cash flows that are within the contract boundary. The cash flows include:
\u2022 premiums and related cash flows
\u2022 claims and benefits, including reported claims not yet paid, incurred claims not yet reported and expected future claims
\u2022 investment management costs incurred in the provision of an investment return service or to enhance the benefits of an insurance contract
\u2022 payments to policyholders resulting from embedded surrender value options
\u2022 an allocation of insurance acquisition cash flows attributable to the portfolio to which the contract belongs
\u2022 claims handling costs
\u2022 policy administration and maintenance costs, including recurring commissions that are expected to be paid to intermediaries for future services
\u2022 an allocation of fixed and variable overheads directly attributable to fulfilling insurance contracts
\u2022 transaction-based taxes.
The Group incorporates, in an unbiased way, all reasonable and supportable information available without undue cost or effort about the
amount, timing and uncertainty of those future cash flows. The Group estimates the probabilities and amounts of future payments under
existing contracts based on information obtained, including:
\u2022 information about claims already reported by policyholders
\u2022 other information about the known or estimated characteristics of the insurance contracts
\u2022 historical data about the Group\u2019s own experience, supplemented when necessary, with data from other sources (historical data is adjusted
to\u00a0reflect current conditions)
\u2022 current pricing information, when available.
The measurement of fulfilment cash flows includes insurance acquisition cash flows which are allocated as a portion of premium to profit
or loss (through insurance revenue) over the period of the contract.
Pre-recognition, insurance acquisition cash flow assets are recognised on the balance sheet prior to allocation to new insurance contracts
and are considered for impairment at each reporting date.
Risk adjustment
The risk adjustment for non-financial risk for a group of insurance contracts reflects the compensation that the Group would require for
bearing uncertainty about the amount and timing of the cash flows that arises from non-financial risk after diversification. The Group\u2019s risk
adjustment is calibrated using a Value at Risk (VAR) methodology. In some cases, the compensation for risk on reinsured business is linked
directly to the price paid for reinsurance.
Discounting
The insurance contract fulfilment cash flows are discounted at rates that reflect the characteristics of the insurance contract liabilities.
These\u00a0are\u00a0determined by starting from an appropriate asset portfolio with deductions to remove risks in the assets that are not present
in\u00a0the\u00a0insurance liabilities.
Contractual service margin (CSM)
The Group\u2019s CSM is a component of the asset or liability for the group of insurance contracts that represents the unearned profit the Group
will\u00a0recognise as it provides services in the future. The Group measures the CSM on initial recognition at an amount that, unless the group
of\u00a0contracts is onerous, results in no income or expenses arising from:
\u2022 initial recognition of the fulfilment cash flows
\u2022 any cash flows arising from the contracts in the Group at that date
\u2022 the derecognition at the date of initial recognition of:
\u2013 any asset for insurance acquisition cash flows
\u2013 any other asset or liability previously recognised related to the group of insurance contracts.
Onerous contracts
For groups of contracts assessed as onerous, the Group recognises a loss in profit or loss for the net outflow, resulting in the carrying amount
of\u00a0the liability for the Group being equal to the fulfilment cash flows and the CSM of the Group being zero. A loss component is established
by the\u00a0Group for the liability for remaining coverage for an onerous group, which represents the losses recognised.
Reinsurance contracts \u2013 initial measurement
The initial measurement of reinsurance contracts held follows the same principles as those for insurance contracts issued, with the exception
of\u00a0the following:
\u2022 reinsurance contracts are recognised from the earlier of the following:
\u2013 the beginning of the coverage period
\u2013 the date the entity recognises an onerous group of underlying insurance contracts, if the entity entered into the related reinsurance
contract\u00a0held in the group of reinsurance contracts held at or before that date.
\u2022 measurement of the cash flows includes an allowance on a probability-weighted basis for the effect of any non-performance by the
reinsurers, including the effects of collateral and losses from disputes
\u2022 the Group determines the risk adjustment for non-financial risk so that it represents the amount of risk being transferred to the reinsurer
\u2022 both day one gains and day one losses are not recognised at initial recognition in the statement of financial position but are deferred into
the\u00a0CSM and released to profit or loss as the reinsurer renders services, except for any portion of a day 1 loss that relates to events before
initial\u00a0recognition
\u2022 if the reinsurance contract is recognised prior to a loss-making underlying contract, the reinsurance CSM can be adjusted to offset a portion of
the inception loss (the loss recovery component). This offsets a portion of the loss recognised on inception of the underlying onerous contract.
Long term insurance contracts \u2013 subsequent measurement
The Group measures the carrying amount of a group of insurance contracts at the end of each reporting period as the sum of:
(i) the liability for remaining coverage comprising fulfilment cash flows related to future service allocated to the Group at that date and the
CSM of the Group at that date
(ii) the liability for incurred claims for the Group reflecting the fulfilment cash flows related to past service allocated to the Group at that date.
Contractual service margin \u2013 measurement
The CSM at the end of the reporting period represents the profit in the group of insurance contracts that has not yet been recognised
in profit or loss, because it relates to future service to be provided.
For a group of insurance contracts the carrying amount of the CSM of that group at the end of the reporting period equals the carrying
amount at\u00a0the beginning of the reporting period adjusted for:
\u2022 the effect of any new contracts added
\u2022 interest accreted on the carrying amount of the CSM during the reporting period, measured at the discount rates at initial recognition
\u2022 changes in fulfilment cash flows relating to future service, except to the extent that:
\u2013 such increases in the fulfilment cash flows exceed the current carrying amount of the CSM, giving rise to a loss; or
\u2013 such decreases in the fulfilment cash flows are allocated to the loss component of the liability for remaining coverage
\u2022 the amount recognised as insurance revenue because of the transfer of services in the period, determined by allocation of the CSM
at the end of the period over the current and remaining coverage period
\u2022 the effect of any currency exchange differences on the CSM.
The changes in fulfilment cash flows relating to future service that adjust the CSM comprise:
\u2022 experience adjustments that arise from the difference between the premium receipts (net of refunds) and any related cash flows such as
insurance acquisition cash flows and insurance premium taxes and the estimate, at the beginning of the period, of the amounts expected.
Differences related to premiums received (or due) in respect of current or past services are recognised immediately in profit or loss while
differences related to premiums received (or due) for future services are adjusted in the CSM
\u2022 changes in estimates of the present value of future cash flows in the liability for remaining coverage, except those relating to the time value
of\u00a0money and changes in financial risk (which are instead recognised in the statement of profit or loss and other comprehensive income)
\u2022 differences between any investment component expected to become payable in the period and the actual investment component that
becomes payable in the period
\u2022 changes in the risk adjustment for non-financial risk that relate to future service.
Adjustments to the CSM noted above are measured at discount rates that reflect the characteristics of the cash flows of the group of
insurance contracts at initial recognition (i.e. the weighted average of the rates applicable at the date of initial recognition of contracts
that joined a group over a 12-month period).
Onerous contracts
Groups of contracts that were not onerous at initial recognition can subsequently become onerous if assumptions and experience extinguish
the CSM. In this case, the Group establishes a loss component for the future losses recognised. The loss component is released based on
a systematic allocation of the subsequent changes in the fulfilment cash flows to: (i) the loss component; and (ii) the liability for remaining
coverage excluding the loss component. The loss component is also updated for subsequent changes in estimates of the fulfilment cash
flows related to future service. The systematic allocation of subsequent changes to the loss component results in the total amounts allocated
to the loss component being equal to zero by the end of the coverage period of a group of contracts (since the loss component will have
materialised in the form of incurred claims). The loss component ensures that over the duration of the contract, the correct amounts are
recognised as insurance revenue and insurance service expenses.
Contractual service margin (CSM) \u2013 recognition
The amount of CSM recognised in the income statement for a group of insurance contracts reflects the insurance contract services provided.
The proportion of the CSM earned is calculated as the amount of coverage units provided in the period divided by the sum of\u00a0all\u00a0the future and
current period coverage units. The Group has elected to discount the future coverage units in this calculation. The table below\u00a0indicates the main
insurance contracts services provided under the Group\u2019s insurance contracts and selected coverage unit(s) used to\u00a0measure those services.
Insurance contract
Insurance service
Coverage unit(s)
Immediate annuity
Payment of insurance claims
Expected annual claims payments
Deferred annuity
Payment of insurance claims (payment phase)
Investment return service (deferral phase)
Lump sum death benefits (deferral phase)
Expected annual claims payments
Expected investment return on backing assets
Sum assured
Longevity swaps
Payment of floating leg of swap
Expected annual floating leg payments
Retail Protection
Potential mortality or morbidity claims
Sum assured
Group Protection
Potential mortality or morbidity claims
Sum assured
Where a specific unit of account contains a mixture of services and therefore coverage units, it is necessary to weight the coverage units so
that the resulting profile of CSM release reflects the overall package of benefits provided. This is particularly pertinent to units of account
incorporating a combination of immediate and deferred annuities. Under IFRS 17, deferred annuities usually provide multiple services, split
between the two phases of benefit provision (the deferral phase and the payment phase). Judgement is therefore required to combine the
different coverage units so that they fairly reflect the services provided. The weighting between the deferral phase and the payment phase
coverage units is calculated so that the services provided in the deferral phase reflect the investment return provided and the probability
weighted delivery of any lump sum death benefits, both adjusted so that all of the CSM is earned in the deferral phase for all contracts
which do not enter the payment phase either through transfer out, withdrawal of funds or death.
Investment components
The Group identifies the investment component of a contract by determining the amount that it would be required to repay to the policyholder
in all scenarios with commercial substance. Investment components are not included in insurance revenue and insurance service expenses.
Insurance finance income and expense
Insurance finance income and expenses comprise changes in the carrying amounts of groups of insurance contracts arising from the effects
of the time value of money, financial risk and changes therein. IFRS 17 requires an accounting policy decision as to whether to recognise all
finance income or expense in profit or loss, or whether to disaggregate the income or expense that relates to changes in financial assumptions into
other comprehensive income. Finance income and expense has been included in profit or loss for all insurance products except for the
Group\u2019s protection business where it has been disaggregated between profit and loss and other comprehensive income. Where insurance
finance income and expense has been disaggregated the amount included in profit or loss is determined by a systematic allocation of the
expected total insurance finance income or expenses over the duration of the group of contracts, using the discount rates determined on
initial recognition.
Changes in the risk adjustment for non-financial risk have been disaggregated between insurance service result and insurance finance
income and expenses.
Reinsurance contracts held \u2013 subsequent measurement
The subsequent measurement of reinsurance contracts held follows the same principles as those for insurance contracts issued except that
changes in the fulfilment cash flows are recognised in profit or loss if the related changes arising from the underlying ceded contracts are
recognised in profit or loss.
Derecognition and contract modification of insurance contracts
The Group derecognises a contract when it is extinguished, i.e. when the specified obligations in the contract expire or are discharged
or cancelled.
The Group also derecognises a contract if its terms are modified in a way that would have changed the accounting for the contract
significantly had the new terms always existed, in which case a new contract based on the modified terms is recognised. If a contract
modification does not\u00a0result in derecognition, then the Group treats the changes in cash flows caused by the modification as changes
in estimates of fulfilment cash\u00a0flows.
Measurement on transition to IFRS 17
On transition to IFRS 17, the insurance contract liabilities were restated, retrospectively applying the Group\u2019s accounting policies. In line with
the provisions available in IFRS 17, the Group applied the full retrospective approach unless impracticable. The full retrospective approach
required the Group to:
\u2022 identify, recognise and measure each group of insurance and reinsurance contracts as if IFRS 17 had always applied
\u2022 derecognise any existing balances that would not exist had IFRS 17 always applied
\u2022 recognise any resulting net difference in equity.
If it was impracticable to apply a full retrospective approach to a group of contracts then the Group selected an approach between the
modified retrospective approach and the fair value approach. If the Group could not obtain reasonable and supportable information
necessary to apply the\u00a0modified retrospective approach, then the fair value approach was selected.
Full retrospective approach
For insurance and reinsurance contracts where the full retrospective approach was adopted, the best estimate and risk adjustment components
of fulfilment cash flows were recognised and measured using the Group\u2019s accounting policies from the inception date of the contracts to the
date of transition. The full retrospective approach was determined to be impracticable where: the effects of retrospective application were not
determinable because information required was not collected (or not with sufficient granularity);`application would require the application of
hindsight; or information was unavailable because of system migrations, data retention requirements or other reasons.
Modified retrospective approach
The objective of the modified retrospective approach is to achieve the closest outcome to retrospective application possible using reasonable
and\u00a0supportable information available without undue cost or effort. For insurance and reinsurance contracts where the modified retrospective
approach has been adopted, the best estimate and risk adjustment components of fulfilment cash flows were recognised and measured
using the Group\u2019s accounting policies at the date of transition except for the application of a permitted transition modification that, for some
groups of contracts issued before 1 January 2021, the risk adjustment for non-financial risk on initial recognition was determined by adjusting
the amount at\u00a01 January 2022 for the expected release of risk before that date. The expected release was determined with reference to the
release of risk of similar contracts that the Group issued in 2022. This modification was used to avoid the application of hindsight to the
calibration of the risk adjustment in prior periods.
Fair value approach
For insurance and reinsurance contracts where the fair value approach has been adopted, the best estimate and risk adjustment components
of\u00a0fulfilment cash flows were determined as at 1 January 2022. The Group determined the contractual service margin (CSM) of the liability
for remaining coverage at the transition date, as the difference between the fair value of the group of insurance contracts and the fulfilment
cash flows measured at that date. In determining fair value, the Group applied the requirements of IFRS 13, \u2018Fair Value Measurement\u2019, except
for the demand deposit floor requirement.
Financial instruments
Recognition and derecognition
Initial recognition of financial assets and liabilities is on the trade date, which is the date on which the Group becomes a party to the
contractual provisions of the instrument. A financial asset or financial liability is initially measured at fair value plus, for a financial asset or
financial liability not\u00a0measured at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issue.
When the fair value of\u00a0financial assets and liabilities differs from the transaction price on initial recognition, the Group recognises the
difference as follows:
\u2022 when the fair value is evidenced by a quoted price in an active market for an identical asset or liability (i.e. a Level 1 input) or based
on\u00a0a\u00a0valuation technique that uses only data from observable markets, the difference is recognised as a gain or loss
\u2022 in all other cases, the difference is deferred and the timing of recognition of deferred day one profit or loss is determined individually.
It is either amortised over the life of the instrument, deferred until the instrument\u2019s fair value can be determined using market observable
inputs or realised through settlement.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when the Group transfers
substantially all the risks and rewards of ownership to another entity. This is the case for cash collateral pledged, where the counterparty
has contractual rights to receive the cash flows generated and which is derecognised from the Consolidated Balance Sheet and a
corresponding receivable recognised for its return.
The Group enters into transactions whereby it transfers assets recognised in its Consolidated Balance Sheet, but retains either all or
substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognised. Examples
of such transactions are repurchase agreements and non-cash collateral pledged, unless the Group defaults on its obligations under the
relevant agreement.
In transactions in which the Group neither retains nor transfers substantially all of the risks and rewards of ownership of a financial asset
and it retains control over the asset, the Group continues to recognise the asset to the extent of its continuing involvement, determined
by the extent to\u00a0which it is exposed to changes in the value of the transferred asset.
The Group derecognises a financial liability when its contractual obligations expire or are discharged or cancelled. The Group also
derecognises a\u00a0financial liability when its terms are modified and the cash flows of the modified liability are substantially different,
in which case a new financial liability based on the modified terms is recognised at fair value.
On derecognition of a financial asset or financial liability, the difference between the carrying amount at the date of derecognition and the
consideration received (including any new asset obtained less any new liability assumed) is recognised in profit or loss.
Modification
If the terms of a financial asset are modified, then the Group evaluates whether the cash flows of the modified asset are substantially
different. If\u00a0the cash flows are substantially different, then the contractual rights to cash flows from the original financial asset are deemed
to have expired. In this case, the original financial asset is derecognised and a new financial asset is recognised at fair value plus any eligible
transaction costs.
Classification and measurement of financial assets
The Group classifies its financial assets on initial recognition as measured at amortised cost, fair value through other comprehensive income
(FVOCI) and fair value through profit or loss (FVTPL).
The classification and measurement of financial assets depends on their contractual cash flow characteristics and how they are managed
(the entity\u2019s business model). The contractual cash flow characteristics test aims to identify those assets with cash flows consistent with a
basic lending arrangement, i.e. which are \u2018solely payments of principal and interest\u2019 (SPPI). The business model test refers to how an entity
manages its financial assets with the objectives of generating cash flows. These factors determine whether the financial assets are measured
at amortised cost, FVOCI or FVTPL. Assets are therefore typically characterised as follows:
\u2022 amortised cost: financial assets with contractual terms that give rise solely to interest and principal cash flows and which are held in a
business model whose objective is to hold the assets to collect their cash flows. They are measured at amortised cost using the effective
interest method. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on
derecognition is also recognised in profit or loss
\u2022 FVOCI: financial assets with contractual terms that give rise solely to interest and principal cash flows and which are held in a business
model whose objective is achieved by holding the assets to collect their cash flows and selling them. Interest income calculated using the
effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses
are recognised in other comprehensive income. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss
\u2022 FVTPL: all other financial assets. Net gains and losses, including any interest or dividend income and foreign exchange gains and losses,
are\u00a0recognised in profit or loss, unless they arise from derivatives designated as hedging instruments in cash flow or net investment hedges.
Notwithstanding the above, on initial recognition the Group may irrevocably designate to FVTPL a financial asset that would otherwise be
measured at amortised cost or FVOCI if doing so eliminates or greatly reduces an accounting mismatch.
In making the SPPI assessment, the Group considers whether the contractual cash flows are consistent with a basic lending arrangement (that
is, interest includes only consideration for the time value of money, credit risk, other basic lending risks and a profit margin that is consistent with
a basic lending arrangement). This includes evaluating whether the financial asset contains a contractual term that could change the timing or
amount of contractual cash flows such that it would not meet this condition. Examples of such contractual terms to be considered are contingent
events that would change the amount or timing of cash flows, leverage features, prepayment and extension features, non-recourse asset
arrangements and features that modify consideration for the time value of money (e.g. periodic reset of interest rates).
The business model reflects how the Group manages assets in order to generate cash flows, i.e. it reflects whether the Group\u2019s objective
is solely to collect the contractual cash flows from assets or to collect both the contractual cash flows and cash flows arising from the sale
of assets. If neither of these is applicable (for example, financial assets are held for trading purposes), the business model is \u2018other\u2019 and the
financial asset is measured at FVTPL. Factors considered by the Group in determining the business model for a group of assets include past
experience on how the cash flows for these assets were collected, how the asset\u2019s performance is evaluated and reported to key
management personnel, how risks are assessed and managed and how managers are compensated.
The objective of the Group\u2019s business model for certain debt instruments, in particular those instruments backing annuity or investment
contract liabilities, including surplus assets, is to fund its liabilities. Consistent with the Group\u2019s investment strategy their performance is
evaluated on a total return basis, as significant buying and selling activity is undertaken on a regular basis to rebalance its portfolio and
to ensure that contractual cash flows from those assets are sufficient to settle the underlying liabilities. These investments do not follow a
\u2018held to collect\u2019 or \u2018held to collect and sell\u2019 business model and are therefore accounted for at FVTPL. This business model is also applicable
to reverse repurchase agreements and to derivatives. Equity instruments are accounted for at FVTPL.
Certain debt securities are held in separate portfolios for long-term yield. These include long-dated debt instruments backing annuities
liabilities, but in surplus to the IFRS 17 best estimate liability and risk adjustment, used to manage interest and inflation rate exposure, as
well as assets backing protection liabilities. These assets represent instruments consistent with the SPPI principles and are accounted for
at amortised cost or\u00a0FVOCI depending on the expected level of trading.
Receivables are accounted for at amortised cost.
Classification and measurement of financial liabilities
The Group classifies and subsequently measures financial liabilities at amortised cost or FVTPL.
Investment contract liabilities
Investment contract liabilities are measured at FVTPL. This is because these liabilities, as well as the related assets, are managed and their
performance evaluated on a fair value basis. For unit linked liabilities, fair value is determined by reference to the value of the underlying net
asset values of the Group\u2019s unitised investment funds at the balance sheet date.
Core and operational borrowings
Borrowings are recognised initially at fair value, net of transaction costs. Borrowings are subsequently stated at amortised cost. The
difference between the net proceeds and the redemption value is recognised in the income statement over the borrowing period using
the effective interest rate method.
Other financial liabilities
Other financial liabilities include derivative liabilities, repurchase agreements and trail commission, which are measured at FVTPL, while
other payable balances are measured at amortised cost.
Derivatives
Derivatives are initially recognised at fair value on the date on which the derivative contract is entered into. The Group\u2019s derivatives, other
than those designated as hedging instruments in cash flow or net investment hedges, are instruments held for trading and, are therefore
accounted for\u00a0at FVTPL.
Derivatives may be embedded in another contractual arrangement. If such a hybrid contract contains a host that is a financial asset, the
Group assesses the entire contract for classification and measurement purposes. Otherwise, the Group accounts for an embedded derivative
separately from the host contract when:
\u2022 its economic characteristics and risks are not closely related to those of the host contract
\u2022 the terms of the embedded derivative would have met the definition of a derivative if they were contained in a separate contract
\u2022 the hybrid contract is not measured at FVTPL.
These embedded derivatives are separately accounted for at FVTPL, unless the Group chooses to designate the entire hybrid contract at FVTPL.
A derivative embedded in a host insurance or reinsurance contract is not accounted for separately from the host contract if the embedded
derivative itself meets the definition of an insurance or reinsurance contract.
Collateral
Collateral received in the form of cash, which is not legally segregated from the Group, is recognised as an asset in the Consolidated Balance
Sheet with a corresponding liability for the repayment in Payables and other financial liabilities. However, where the Group has a currently
enforceable legal right of set-off and the ability and intent to net settle, the collateral liability and associated derivative balances are shown net.
Non-cash collateral received is not recognised in the Consolidated Balance Sheet unless the transfer of the collateral meets the derecognition
criteria from the perspective of the transferor. Such collateral is typically recognised when the Group either: (a) sells or repledges these assets
in the absence of default, at which point the obligation to return this collateral is recognised as a liability; or (b) the counterparty to the
arrangement defaults, at which point the collateral is seized and recognised as an asset.
Collateral pledged in the form of cash, which is legally segregated from the Group, is derecognised from the statement of financial position
with a\u00a0corresponding receivable recognised for its return. Non-cash collateral pledged is not derecognised from the statement of financial
position unless the Group defaults on its obligations under the relevant agreement and therefore continues to be recognised in the
Consolidated Balance Sheet within Financial investments.
Impairment of financial assets
The Group assesses on a forward-looking basis the expected credit loss (ECL) associated with its financial assets measured at amortised
cost and FVOCI and recognises a loss allowance for such losses at each reporting date. Expected credit losses are defined as the present
value of the difference between all contractual cash flows that are due and all cash flows that the entity expects to receive (i.e. the cash
shortfall), weighted based on their probability of occurrence. The loss allowance recognised under IFRS 9 can be equal to an amount
corresponding to a 12-month ECL or a lifetime ECL. A lifetime ECL is the ECL resulting from all possible default events over the expected
life of the financial asset; a 12-month ECL is the portion of lifetime ECL resulting from default events on a financial asset that are possible
within the 12 months after the reporting date. For a financial asset that is credit-impaired at the reporting date, but that is not a purchased or
originated credit-impaired financial asset, expected credit losses are measured as the difference between the asset\u2019s gross carrying amount
and the present value of estimated future cash flows, discounted at the financial asset\u2019s original effective interest rate. Any adjustment is
recognised in profit or loss as an impairment gain or loss.
The Group defines default on a financial asset as the inability to meet in full and on time an original promise of expected cash flows,
the amount and timing of which are defined with certainty. Any breach of this promise, by any amount or time (in excess of any potential
planned grace period), constitutes a default. This is consistent with the definition of default used for internal credit risk management
purposes. An asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of
that financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable data:
\u2022 significant financial difficulty of the borrower
\u2022 a breach of contract, such as a default or past due event
\u2022 the restructure of a loan by the Group on terms which it would not otherwise consider
\u2022 it becomes probable that the borrower will enter bankruptcy or other financial reorganisation.
A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.
The ECL model is run from the date of initial recognition of a financial asset and its output updated at every reporting period, even if no actual
loss events have taken place. The impact of updating the inputs of the ECL model in the reporting period is recognised in profit or loss directly
where it affects the carrying value of financial assets at amortised cost, while for assets at FVOCI an equal and opposite movement is
recorded in other comprehensive income.
In order to determine whether the Group measures ECLs at an amount equal to 12-month ECL or lifetime ECL, at each reporting period
the Group is required to assess which \u2018stage\u2019 a financial asset falls into. Stages reflect the general pattern of deterioration in credit risk
of a financial instrument that ultimately defaults, as follows:
\u2022 Stage 1 includes financially healthy financial assets that are expected to perform in line with their contractual terms and which have
no signs of\u00a0increased credit risk
\u2022 Stage 2 includes financial assets for which a significant increase in credit risk has occurred since initial recognition, but which are not
credit-impaired
\u2022 Stage 3 applies to credit-impaired financial instruments.
When financial assets are under Stage 1, 12-month ECLs are recognised. When financial assets are under Stage 2 or 3, lifetime ECLs are
recognised. An instrument moves down (or up) the stages when a significant increase in credit risk (SICR) has happened (or has reversed).
When determining whether the credit risk of a financial instrument has increased significantly since initial recognition, the Group considers
reasonable and supportable information, both qualitative and quantitative, that is relevant and is available without undue cost or effort,
including forward-looking information at its disposal. Key indicators used in order to determine whether a SICR has occurred (either in
isolation or in combination) are:
\u2022 deterioration in rating grade between origination date and reporting date. The level of deterioration required by an individual asset is
determined using a relative rating matrix
\u2022 exposure is identified on the investment managers\u2019 \u2018watchlist\u2019
\u2022 exposure is identified on internal \u2018credit watchlists\u2019
\u2022 a manual shift of an exposure to Stage 2 on an exceptional basis (where required, using management judgement).
The provisions of IFRS 9 include a rebuttable presumption that the credit risk on a financial asset has increased significantly since initial
recognition when contractual payments are more than 30 days past due, which is taken into account for this assessment.
The Group makes use of a practical expedient available in IFRS 9 whereby it can be assumed that the credit risk on a financial instrument
has\u00a0not\u00a0increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date
(e.g.\u00a0investment grade as determined by the Group\u2019s asset managers). This allows recognition of 12-month ECLs as opposed to, potentially,
lifetime ECLs. This is deemed to be the case where assets that have been downgraded remain of good credit quality (i.e. investment grade
as\u00a0determined by the Group\u2019s asset managers) as at the reporting date, to the extent that, where relevant, the Group\u2019s internal credit risk
ratings are considered to be consistent with a globally understood definition of \u2018low credit risk\u2019.
The Group estimates ECLs on its financial investments at amortised cost and debt instruments at FVOCI which are not credit-impaired
by using the probability of default approach. Based on this method, the ECLs are a probability-weighted estimate of the present value of
estimated cash shortfalls, i.e. the weighted average of credit losses, with the respective risks of a default occurring used as the weightings.
For this purpose, the key elements to be calculated are the Probability of Default (PD), i.e. the estimate of the likelihood of default over a
given time horizon (either 12 months or lifetime); the respective Loss Given Default (LGD); and the Exposure at Default (EAD).
Exposures that move into Stage 3 are able to transition back to Stage 2 if the asset no longer meets the definition of default. Similarly,
exposures will re-transition from Stage 2 to Stage 1 where the SICR indicators no longer apply. No separate cure or probation periods are
applied on the basis that assets will not be re-rated or moved out of default until there is evidence of stable and improved performance.
In order to determine 12-month or lifetime PDs the Group\u2019s models utilise historical data obtained from S&P and Moody\u2019s in order to
evaluate transitions (i.e. the probability that a security changes rating in a given year) and defaults, plus scenario-specific annual scaling
factors which adjust the PDs for forward-looking information. The final PDs produced by the model are unconditional, i.e. they incorporate
both the probability of not defaulting until the start of the period and the subsequent probability of default in that period, conditional on the
position not having defaulted to that point. This allows them to be summed over 12 months to provide 12-month PD estimates, or over all
remaining months to produce lifetime PD estimates.
LGD is the magnitude of the likely loss if there is a default, based on the history of recovery rates of claims against defaulted counterparties
and taking into account collateral values where applicable.
EAD represents the expected exposure in the event of a default. The Group estimates LGD based on the history of recovery rates of claims
against defaulted counterparties. Appropriate haircuts are applied to baseline unsecured LGDs and used in conjunction with forecast
collateral values to estimate LGD for assets secured by collateral.
The Group has adopted a simplified approach for trade receivables, contract assets and finance and operating lease receivables. This allows
measurement of lifetime ECLs only, thereby removing the need to identify SICRs. For these balances, the Group makes use of provision
matrices in order to calculate such lifetime ECLs. This is a practical expedient allowed by IFRS 9 whereby historical credit loss experience
and fixed loss rates are applied to the balances outstanding. Historical loss rates are adjusted to allow for forward-looking information.
Hedge accounting
The Group uses hedge accounting, provided the prescribed criteria are met, to recognise the offsetting effects of changes in the fair value
or cash flow of the derivative instrument and the hedged item. Hedge accounting can be applied in order to:
\u2022 hedge the exposure to fair value movements of a recognised asset or liability or an unrecognised firm commitment, or a component
of any such item, that is attributable to a particular risk and could affect the Consolidated Income Statement
\u2022 hedge the exposure to variability in cash flows attributable to a particular risk associated with all, or a component of, a recognised asset
or liability, or a highly probable forecast transaction, that could affect the Consolidated Income Statement
\u2022 hedge the exposure to the currency risk associated with a net investment in a foreign operation.
The relationship between the hedging instrument and the hedged item, together with the risk management objective and strategy for
undertaking the hedge transaction, are documented formally at the inception of the transaction. The documentation includes identification of
the hedging instrument, the hedged item, the nature of the risk being hedged and how the Group will assess whether the hedging relationship
meets the hedge effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the hedge ratio is determined).
A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements:
\u2022 there is an economic relationship between the hedged item and the hedging instrument
\u2022 the effect of credit risk does not dominate the value changes that result from that economic relationship
\u2022 the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually
hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
The effective portion of the gain or loss on the hedging items is recognised in the Consolidated Statement of Comprehensive Income and
in a separate reserve within equity (cash flow hedge). The gain or loss relating to the ineffective portion is recognised immediately in the
Consolidated Income Statement. Amounts accumulated in equity are reclassified in the periods when the hedged item affects profit or loss.
The change in fair value of the hedging instrument related to the basis spread or forward points movements is recognised in a separate
component of equity (cost of hedging reserve) to the extent that it relates to the hedged item (cost of hedging reserve) and expensed on
a systematic and rational basis over the period of the hedge relationship.
Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date.
Fair value measurements are based on observable and unobservable inputs. Observable inputs reflect market data obtained from
independent sources, while unobservable inputs reflect the Group\u2019s view of market assumptions in the absence of observable market
information. The Group utilises techniques that maximise the use of observable inputs and minimise the use of unobservable inputs.
The best evidence of the fair value of a financial instrument at initial recognition is normally the transaction price. In certain circumstances,
the fair value at initial recognition differs from the transaction price. If the fair value is evidenced by comparison by a quoted price in an active
market for an identical instrument, or is based on a valuation technique that uses only data from observable markets, the difference between
the fair value at initial recognition and the transaction price is recognised as a gain or loss in the Consolidated Income Statement. In all other
cases, the difference between the fair value at initial recognition and the transaction price is deferred and recognised in the Consolidated
Income Statement over the life of the instrument to the extent that it arises from a change in a factor (including time) that market participants
would take into account when pricing the instrument.
Revenue
Insurance revenue
The Group\u2019s insurance revenue depicts the provision of services arising from a group of insurance contracts, reflecting the consideration
the Group expects to be entitled to in exchange for those services. Insurance revenue from a group of insurance contracts is therefore the
relevant portion for the period of the total consideration for the contracts, (i.e. the amount of premiums paid to the Group adjusted for
financing effect (the\u00a0time value of money) and excluding any investment components).
The total consideration for a group of contracts covers amounts related to the provision of services and comprises:
\u2022 the release of the CSM
\u2022 changes in the risk adjustment for non-financial risk relating to current service
\u2022 claims and other insurance service expenses expected at the beginning of the period
\u2022 experience adjustments arising from premiums received in the period other than those that relate to future service
\u2022 insurance acquisition cost recovery determined by allocating the portion of premiums related to the recovery of those costs on the basis
of\u00a0insurance coverage provided
\u2022 other amounts, including any other pre-recognition cash flow assets derecognised at the date of initial recognition.
Fees from fund management and investment contracts
The Group generates revenue from acting as the investment manager for clients. Fees charged on investment management services are
based on the contractual fee arrangements applied to assets under management and recognised as revenue as the services are provided.
The Group\u2019s income from investment contracts is primarily derived from fees for administration and managing of funds in pension plans.
Revenue generated on investment contracts is recognised as services are provided. No significant judgements are applied on the timing or
transaction price. In the instances of performance fees where revenue is subject to meeting a certain performance threshold, such revenue is
not recognised until the condition has been met and it is highly probable that no significant reversal of amounts would occur. Variable costs
directly related to\u00a0securing new contracts are capitalised and amortised over the estimated period over which the revenue is earned.
Transaction fees are charged to implement trades for clients. Such fees are charged at the time the transaction takes place and are based
on\u00a0the\u00a0size of the underlying contract.
Other operational income from contracts with customers
House building
House building revenue arises from the sale of residential properties and land and is recognised net of discounts and sales incentives.
It also includes sale proceeds of part exchange properties. Sales of private houses are recognised on legal completion. Sales of social
housing, where multiple units are developed and sold under a contractual agreement with a single customer, typically a housing association,
are recognised over time in accordance with construction progress. Sales of land and commercial property are recognised on unconditional
exchange, namely when contracts are exchanged or missives concluded and, where appropriate, construction is complete. The transaction
price is determined using extensive research and expert judgement, current market values and regional variations.
Warranties are provided on all properties and range from 2-10 years. Due to their features, these do not represent separate performance obligations.
Professional services fees
The Group\u2019s professional services fees revenue arises from professional services provided by employed surveyors and third-party providers,
panel\u00a0management fees and administration fees. These fees are based on fee scales or contracts. Revenue is recognised when the service
has\u00a0been rendered.
In addition, the Group derives professional fees from facilitation of mortgage arrangements and related products such as conveyancing. These are
based on an agreement/contract and could be tiered based on volume. The obligation in such instances is satisfied on completion of the mortgage/
service, at which point the revenue is recognised. There is no significant judgement applied on the timing or amount of fee recognised.
Insurance broker fees
Fees are charged on each performance obligation offered to the customer as per agreed structure. Revenue for placement services is
recognised at the point in time when the intermediary has satisfied its performance obligation, that is when the terms of the insurance
policy have been agreed contractually by the insurer and policyholder and the insurer has a present right to payment from the policyholder.
No significant judgements are applied on the timing or transaction price.
Investment return
Investment return includes unrealised fair value gains and losses on financial investments at fair value through profit or loss, realised gains
and\u00a0losses, dividends, rent and interest. Dividends are accrued on an ex-dividend basis. Interest income is recognised as it accrues, taking into
account the effective yield on the investment. Rental income is recognised on an accruals basis and is generally recognised on a straight line
basis unless there is compelling evidence that benefits do not accrue evenly over the period of the lease. Interest income for financial assets
which are not classified as fair value through profit or loss (FVTPL) is recognised using the effective interest method.
A gain or loss on a financial investment is only realised on disposal or transfer and is the difference between the proceeds received, net
of transactions cost and its original cost or amortised cost, as appropriate. Realised gains or losses on investment property represent the
difference between the net disposal proceeds and the carrying value of the property.
Unrealised gains and losses represent the difference between the carrying value at the end of the year and the carrying value at the previous
year end or purchase value during the year, less the reversal of previously unrealised gains and losses in respect of disposals made during
the year.
Insurance service expenses
Insurance service expenses arising from insurance contracts are recognised in profit or loss as they are incurred. They exclude repayments
of investment components and comprise the following items:
\u2022 incurred claims and benefits, excluding investment components reduced by loss component allocations
\u2022 incurred directly attributable expenses
\u2022 insurance acquisition cost amortisation
\u2022 insurance acquisition cost asset impairment.
Dividends
Interim dividends on ordinary shares are deducted from retained earnings in the period in which they are paid. Final dividends on ordinary
shares are recognised as a liability in the period in which they have been approved by shareholders of the Company.
Earnings per share
Earnings per share is a measure of the portion of the Group\u2019s profit allocated to each outstanding share. It is calculated by dividing net
income attributable to ordinary equity holders by the weighted average number of ordinary shares in issue during the year, excluding
employee scheme treasury shares. For this purpose, net income is defined as the profit after tax, attributable to equity holders of the
Company, derived from continuing operations.
For diluted earnings per share, the weighted average number of ordinary shares in issue, excluding employee scheme treasury shares, is
adjusted to assume conversion of all dilutive potential ordinary shares, such as share options granted to employees. Potential or contingent
share issuances are treated as dilutive when their conversion to shares would decrease net earnings per share.
Intangible assets
Intangible assets mainly consist of capitalised software costs.
Where software costs are separately identifiable and measurable, they are capitalised at cost and amortised over their expected useful life
on a straight-line basis. Costs incurred to internally develop software are only capitalised if the expenditure can be measured reliably, the
product or process is technically and commercially feasible, future economic benefits are probable and the Group intends to and has
sufficient resources to\u00a0complete such development and to use or sell the asset. Otherwise, such costs are recognised in profit or loss as
incurred. The estimated amortisation period for IT development costs and software is between 3 and 10 years.
Intangible assets acquired via business combinations are recognised at fair value and are subsequently amortised on a straight-line basis
over their estimated useful life.
Amortisation methods, useful lives and any expected residual values are reviewed at each reporting date and adjusted if appropriate.
Intangible assets are tested for impairment either individually or at the cash-generating unit level. Intangible assets with indefinite useful
lives and intangible assets not yet available for use are tested for impairment at least annually, or whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. Intangible assets with finite useful lives are tested when there are indications
of impairment. The recoverable amount is the higher of an asset\u2019s fair value less costs to sell and its value in use.
Investment property
Investment property comprises land and buildings which are held for long-term rental yields and capital growth, as well as right-of-use
assets of the same nature and are not occupied by the Group. Completed investment property is carried at fair value with changes in fair
value recognised in the Consolidated Income Statement within Investment return. Investment properties under construction are included
within Property, plant and equipment and are stated at cost less any impairment until construction is completed or fair value becomes
reliably measurable.
Non-current assets held for sale
Assets and liabilities part of a disposal group classified as held for sale are shown separately in the Consolidated Balance Sheet. They are
recorded at the lower of their carrying amount and their fair value less costs to sell.
Discontinued operations
Discontinued operations comprise those activities that were disposed of or classified as held for sale at the end of the period and represent
a separate major line of business or geographical area that can clearly be distinguished for operational and financial reporting purposes.
The results of discontinued operations are presented separately in the Consolidated Income Statement and Consolidated Statement of
Comprehensive Income. Comparatives are re-presented where applicable.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, treasury bills and other short-term highly liquid
investments with maturities of three months or less from the date of acquisition.
Property, plant and equipment
Property, plant and equipment includes tangible assets owned by the Group (such as land and office and other buildings) or held under lease
arrangements (such as office buildings, IT equipment and vehicles). Property, plant and equipment includes owner occupied property held by a
fund, the units of which determine benefits for its investors. In accordance with IAS 16, \u2018Property, Plant and Equipment\u2019, the Group has elected
to measure this asset at fair value, with changes in fair value recognised in the Consolidated Income Statement within Investment return.
All other assets within Property, plant and equipment are carried at historical cost less accumulated depreciation, calculated on a straight-
line basis over their estimated useful life. Amortisation methods, useful lives and any expected residual values are reviewed at each
reporting date and\u00a0adjusted if appropriate.
An impairment review of Property, plant and equipment not carried at fair value is performed whenever events or changes in circumstances
indicate that their carrying amount may not be recoverable. Where the carrying amount of an asset is greater than its estimated recoverable
amount, which is the higher of the assets fair value less costs of disposal and value in use, it is written down immediately to its recoverable
amount, with an impairment loss recognised in the Consolidated Income Statement.
Leases
Lessee
Where the Group is a lessee, it recognises leases on the Consolidated Balance Sheet as \u2018right-of-use\u2019 assets and lease liabilities.
The right-of-use assets\u2019 value is initially recognised as the calculated value of the lease liabilities, initial direct costs and incentives received.
The right-of-use assets are subsequently accounted for in accordance with the cost model in IAS 16, \u2018Property, Plant and Equipment\u2019 or as
investment property under IAS 40, \u2018Investment Property\u2019. The Group also assesses right-of-use assets classified as Property, plant and
equipment for impairment when such indicators exist.
The initial measurement of the lease liabilities is made up of the present value of lease payments to be made over the lease term, including
fixed lease payments and excluding lease incentive receivables. The Group uses the incremental borrowing rate as a discount rate for
calculating the lease liabilities. The lease liabilities are unwound over the term of the lease giving rise to an interest expense. Additionally,
the liabilities are reduced when lease payments are made. The Group reassesses the carrying amount of lease liabilities and right-of-use
assets if certain events occur that modify the original assumptions used to calculate the lease balances upon initial recognition.
The Group leases offices, vehicles, IT equipment and investment properties under non-cancellable operating lease agreements. The
Group has elected to make use of the recognition exemptions as permitted in respect of short-term leases (lease contracts with a term
of 12 months or less) and lease contracts for which the underlying asset is of low value. Such leases are not recognised on the Consolidated
Balance Sheet but the Group recognises the associated lease payments as an expense over the lease term.
Lessor
Where the Group is the lessor, leases are classified as finance leases if the risks and rewards of ownership are substantially transferred to
the lessee and operating leases if they are not substantially transferred.
The Group leases certain investment properties to third parties. Under these agreements, substantially all the risks and rewards incidental to
ownership are transferred to the lessee and therefore the contracts have been classified as finance leases. At the lease commencement date,
the\u00a0Group derecognises the investment property asset and recognises a receivable asset on its Consolidated Balance Sheet to reflect the net
investment in the\u00a0lease, equal to the present value of the lease payments. The Group recognises finance income over the lease term to reflect
the rate of return on\u00a0the net investment in the lease.
Under other lease agreements the Group is considered to substantially retain all the risks and rewards of ownership of the underlying asset,
therefore these contracts have been classified as operating leases. Lease income from operating leases is recognised in the Consolidated
Income Statement on\u00a0a straight-line basis over the lease term.
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow
of\u00a0resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can
be\u00a0made. Where the Group expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised
as\u00a0a\u00a0separate asset but only when the reimbursement is virtually certain. The Group recognises a provision for onerous contracts when the
expected benefits to be derived from a contract are less than the unavoidable costs of meeting the obligations under the contract.
Tax
Current tax
Current tax comprises tax payable on current year profits, adjusted for non-tax deductible or non-taxable items and any adjustments to tax
payable in respect of previous periods. Current tax is recognised in the Consolidated Income Statement unless it relates to items which are
recognised in the Consolidated Statement of Comprehensive Income or directly in equity.
Deferred tax
Deferred tax is calculated on differences between the accounting value of assets and liabilities and their respective tax values. Deferred tax
is also recognised in respect of unused tax losses to the extent it is probable that future taxable profits will arise against which the losses
can be utilised. Deferred tax is charged or credited to the Consolidated Income Statement, except when it relates to items charged or
credited to the Consolidated Statement of Comprehensive Income or charged or credited directly in equity.
Tax attributable to policyholders and equity holders
The total tax expense shown in the Group\u2019s Consolidated Income Statement includes income tax borne by both policyholders and equity
holders. This has been split between tax attributable to policyholders\u2019 returns and equity holders\u2019 profits. Policyholder tax comprises the
tax suffered on policyholder investment returns, while equity holder tax is corporation tax charged on equity holder profit. The separate
presentation is intended to provide more relevant information about the tax that the Group pays on the profits that it makes.
Use of estimates
Tax balances include the use of estimates and assumptions which affect items reported in the Consolidated Balance Sheet, Consolidated
Income Statement and Consolidated Statement of Comprehensive Income. Although these estimates are based on management\u2019s best
knowledge of current circumstances and future events and actions, actual results may differ from those estimates.
For tax this includes the determination of assets and liabilities recognised in respect of uncertain tax positions and the estimation of future
taxable income supporting deferred tax asset recognition.
As the Group operates internationally, it is exposed to uncertain tax positions and changes in legislation in the jurisdictions in which it
operates. The assessment of uncertain tax positions is subjective and significant management judgement is required. This judgement is
based on interpretation of legislation, management experience and professional advice. The directors have assessed the Group\u2019s uncertain
tax positions and are comfortable that the provisions in place are not material individually or in aggregate and that a reasonable possible
alternative outcome in the\u00a0next financial year would not have a material impact to the results of the Group.
Foreign exchange and exchange rates
Foreign currency transactions are translated into the functional currency using the exchange rate prevailing at the date of the transactions.
The\u00a0functional currency of the Group\u2019s foreign operations is the currency of the primary economic environment in which the entity operates.
The\u00a0assets and liabilities of all of the Group\u2019s foreign operations are translated into sterling, the Group\u2019s presentation currency, at the closing
rate\u00a0at\u00a0the date of the Consolidated Balance Sheet. Income and expenses are translated at average exchange rates. On consolidation,
exchange differences arising from the translation of the net investment in foreign entities and of borrowings and other currency instruments
designated as\u00a0hedges of such investments, are taken to a separate component of shareholders\u2019 equity.
Foreign exchange gains and losses are recognised in the Consolidated Income Statement, except when recognised in equity as qualifying
cash flow or net investment hedges.
Share-based payments
The Group accounts for options and awards under equity compensation plans, until such time as they are fully vested, using the fair value
based\u00a0method of accounting. The fair value at the date of grant of the equity instrument is recognised as an expense, spread over the vesting
period of the instrument. The total amount to be expensed is determined by reference to the fair value of the awards, excluding the impact of
any\u00a0non-market vesting conditions. At each balance sheet date, the Group revises its estimate of the number of equity instruments which are
expected to become exercisable. It recognises the impact of the revision of original estimates, if any, in the Consolidated Income Statement
and a\u00a0corresponding adjustment is made to equity. On vesting or exercise, the difference between the expense charged to the Consolidated
Income Statement and the actual cost to the Group is\u00a0transferred to Retained earnings. Where new shares are issued, the proceeds received
are credited to Share capital and Share premium.
Share capital, share premium and employee scheme treasury shares
An equity instrument is any contract which evidences a residual interest in the net assets of an entity. It follows that a financial instrument
is\u00a0treated as equity if:
\u2022 there is no contractual obligation to deliver cash or other financial assets or to exchange financial assets or liabilities on unfavourable
terms
\u2022 the instrument is either a non-derivative which contains no contractual obligation to deliver a variable number of own equity instruments,
or\u00a0is\u00a0a\u00a0derivative which will be settled only by the Group exchanging a fixed amount of cash, or other financial assets, for a fixed number
of\u00a0its\u00a0own equity instruments.
Where any Group entity purchases the Company\u2019s equity share capital, the consideration paid, including any directly attributable
incremental costs\u00a0(net of income taxes), is deducted from equity attributable to shareholders. Where such shares are subsequently
sold, reissued or otherwise\u00a0disposed of, any consideration received is included in equity attributable to shareholders, net of any directly
attributable incremental transaction costs and the related income tax effects. Shares held on behalf of employee share schemes are
disclosed as such on the Consolidated Balance Sheet.
Fiduciary activities
Assets associated with fiduciary activities and the income arising from those assets, together with associated commitments to return such
assets to customers, are not included in these financial statements. Where the Group acts in a fiduciary capacity, for instance as a trustee
or\u00a0agent, it has no contractual rights over the assets concerned.
(ix) Foreign exchange and exchange rates
The principal foreign exchange rates used for translation are:
Year end exchange rates
2025
2024
US Dollar
1.35
1.25
Euro
1.15
1.21
Average exchange rates
2025
2024
US Dollar
1.32
1.28
Euro
1.17
1.18
", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesAccountingEstimatesAndErrorsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-571": { "value": "
1. Basis of preparation and accounting policies
Legal & General Group Plc, a public limited company incorporated and domiciled in England and Wales, operates across three broad
business areas of institutional retirement, asset management and retail (insurance and retirement), through its subsidiaries and associates
in\u00a0the United Kingdom (UK), the United States, Bermuda and other countries throughout the world.
(i) Basis of preparation
The Group financial statements, which comprise the information on pages 131 to 234, except the information disclosed as being unaudited,
have been prepared in accordance with UK-adopted international accounting standards, comprising International Accounting Standards
and\u00a0IFRS as issued by the International Accounting Standards Board (IASB) and related interpretations issued by the IFRS Interpretations
Committee. Endorsement is granted by the UK Endorsement Board (UKEB). The Group financial statements have been prepared under the
historical cost convention, as modified by the revaluation of investment property, financial assets at fair value through other comprehensive
income and certain assets and financial liabilities (including derivative instruments) at\u00a0fair value through profit or loss.
The Group has selected accounting policies which state fairly its financial position, financial performance and cash flows for a reporting
period. The accounting policies have been consistently applied to all years presented unless otherwise stated.
Financial assets and financial liabilities are disclosed gross in the Consolidated Balance Sheet unless a legally enforceable right of offset
exists and there is an intention to settle recognised amounts on a net basis. Income and expenses are not offset in the Consolidated Income
Statement unless required or permitted by any accounting standard or International Financial Reporting Interpretations Committee (IFRIC)
interpretation, as detailed in the applicable accounting policies of the Group.
(ii) Going concern
The Group\u2019s business activities, together with the factors likely to affect its future development, performance and position in the current
economic environment are set out in this Annual report and accounts. The financial position of the Group, its cash flows, liquidity position and
borrowing facilities are described in these consolidated financial statements. Principal risks and uncertainties are detailed on pages 42 to 46
The directors have made an assessment of the Group\u2019s going concern, considering both the current performance and the outlook for a period
of at least, but not limited to, 12 months from the date of approval of these consolidated financial statements, using the information available
up to the date of issue of this Annual report and accounts.
The Group manages and monitors its capital and liquidity and applies various stresses, including adverse inflation and interest rate scenarios,
to those positions to understand potential impacts from market downturns. Our key sensitivities and the impacts on our capital position from
a range of\u00a0stresses are disclosed in Note 28 Management of capital resources (this note is unaudited). These stresses do not give rise to any
material uncertainties over the ability of\u00a0the Group to continue as a going concern. Based upon the available information, the directors consider that
the Group has the plans and resources to manage its business risks successfully and that it remains financially strong and well diversified.
Having reassessed the principal risks and uncertainties (both financial and operational) in light of the current economic environment, as detailed
on pages 42 to 46, the directors are confident that the Group and Company will have sufficient funds to continue to meet its liabilities as they
fall due for a period of, but not limited to, 12 months from the date of approval of the financial statements and therefore have considered it
appropriate to adopt the going concern basis of accounting when preparing the financial statements.
(iii) Impact of the sale of the Group's US insurance entity on financial reporting
On 7 February 2025 the Group announced that it had agreed to sell its US insurance entity, comprising its US protection and US pension
risk transfer (PRT) businesses, through the disposal of its entire shareholding in Legal & General America Inc., the parent company of Banner
Life and William Penn, to Meiji Yasuda Life Insurance Company (Meiji Yasuda), a Japanese mutual life insurer, for $2.3bn. The transaction
completed on 2\u00a0February 2026 for proceeds of $2.6bn (which reflects net asset transfers and the impact of business performance since
1 January 2025).
Following completion, Meiji Yasuda became the owner of the Group's US protection business and now holds a 20% economic interest in
its US PRT business. The Group has retained 80% of existing and new PRT business through a new reinsurance agreement with Meiji
Yasuda.
The transaction has had the following impacts on financial reporting:
\u2022 In accordance with IFRS 5, 'Non-current Assets Held for Sale and Discontinued Operations' the Group's US insurance entity qualifies for
classification and measurement as a held for sale disposal group. This includes the entirety of the US protection and US PRT businesses.
\u2022 The disposal group also meets the definition of discontinued operations. As a consequence, the results of the disposal group for the year
ended 31 December 2025 have been presented in separate lines within the Group Consolidated Income Statement and Consolidated
Statement of Comprehensive Income. Comparative information has been re-presented accordingly in line with IFRS 5 requirements.
\u2022 The composition of the Group's reportable segments in accordance with IFRS 8 'Operating Segments', has changed. In preparation for the
completion of the disposal, the results related to the Group's US protection business and 20% of those related to the US PRT business have
now been reported to key decision makers separately. As a consequence, they are no longer included in the results of the Insurance and
Institutional Retirement segments and are now presented separately as \"Non-retained US business\". Exposure to the remaining 80% of the
US PRT business will be retained by way of the new reinsurance agreement and therefore these results continue to be reported within
Institutional Retirement. Segmental information in relation to the prior year has been re-presented where applicable to reflect these changes.
\u2022 The calculation of core operating profit and core operating earnings per share (core operating EPS), two of the Group\u2019s Alternative
Performance Measures (APMs), has been updated. Non-retained US business is no longer considered to be key to achieving the Group\u2019s
strategy and therefore, in line with the definition of core operating profit and core operating EPS, its results are now excluded from their
calculation. Prior year comparatives have been restated accordingly. As a result of the change, core operating profit for the year ended
31 December 2024 has decreased by \u00a382m (from \u00a31,616m to \u00a31,534m). Core operating EPS for the year ended 31 December 2024
has decreased by 1.03pps (from 20.23pps to 19.20pps).
(iv) New standards, interpretations and amendments to published standards that have been adopted by the Group
The Group has applied Amendments to IAS 21, \u2018The Effects of Changes in Foreign Exchange Rates\u2019: \u2018Lack of Exchangeability' for the first
time in the year commencing 1 January 2025, which did not have a material impact on its consolidated financial statements.
(v) Standards, interpretations and amendments to published standards which are not yet effective
Amendments to IFRS 9, \u2018Financial Instruments\u2019 and IFRS 7, \u2018Financial Instruments: Disclosures\u2019: \u2018Amendments to the Classification and
Measurement of Financial Instruments\u2019
These amendments, issued in May 2024, provide the following:
\u2022 clarification around the date of recognition and derecognition of some financial assets and liabilities, with a new exception for some
financial liabilities settled through an electronic cash transfer system
\u2022 clarification and guidance for assessing whether a financial asset meets the solely payments of principal and interest (SPPI) criterion
\u2022 new disclosure requirements for certain instruments with contractual terms that can change cash flows (such as some financial
instruments with features linked to the achievement of environment, social and governance targets)
\u2022 an update to the disclosures for equity instruments designated at fair value through other comprehensive income (FVOCI).
The amendments are effective for annual reporting periods beginning on or after 1 January 2026. These amendments are not expected
to give rise to a material impact on the Group\u2019s consolidated financial statements.
Annual improvements to IFRS Accounting Standards \u2013 Volume 11
The IASB issued its annual improvements in July 2024, which include a collection of minor amendments to accounting standards, applicable
for annual reporting periods beginning on or after 1 January 2026. These are not expected to give rise to a material impact
on the Group\u2019s consolidated financial statements.
IFRS 18, \u2018Presentation and Disclosure in Financial Statements\u2019
IFRS 18, issued in April 2024, will replace IAS 1, \u2018Presentation of Financial Statements\u2019. IFRS 18 introduces new requirements for
presentation within the income statement, including specified totals and subtotals, which aim at increasing comparability of the
financial performance of similar entities, as well as provide more relevant information and transparency to users.
The standard is effective for reporting periods beginning on or after 1 January 2027, with earlier application permitted. The Group is currently
assessing the impacts of the amendments on the consolidated and Company financial statements, in particular around the presentation of its
results within the Consolidated Income Statement and the definition and disclosure of management-defined performance measures.
IFRS 19, \u2018Subsidiaries without Public Accountability: Disclosures\u2019
IFRS 19, issued in May 2024, allows for certain eligible subsidiaries of parent entities that report under IFRS Accounting Standards to apply
reduced disclosure requirements. IFRS 19 is effective for reporting periods beginning on or after 1 January 2027, with early application
permitted, subject to UK endorsement. The Group is not eligible to apply IFRS 19.
(vi) Critical accounting judgements and the use of estimates
The preparation of the financial statements includes the use of estimates and assumptions which affect items reported in the Consolidated
Balance Sheet and Consolidated Income Statement and the disclosure of contingent assets and liabilities at the date of the financial
statements. Although these estimates are based on management\u2019s best knowledge of current circumstances and future events and actions,
material adjustments could be made to the carrying amounts of assets and liabilities within the next financial year. The Audit Committee
reviews the reasonableness of judgements associated with and the application of material accounting policies. The significant accounting
matters considered by the Audit Committee in respect of the year ended 31 December 2025 are included within the Audit Committee report
on page 69.
The major areas of critical accounting judgement on policy application are considered below:
Insurance and investment contract liabilities (Notes 22 and 23): Product classification and the assessment of the significance of\u00a0insurance
risk transferred to the Group in determining whether a contract should be accounted for as an insurance or\u00a0investment\u00a0contract
Contracts which transfer significant insurance risk to the Group are classified as insurance contracts. Contracts that transfer financial risk
(e.g.\u00a0change in interest rate or security price) to the Group but not significant insurance risk are classified as investment contracts.
Judgement is required in order to assess the significance of the transfer of insurance risk within a contract. This assessment is based
on whether the occurrence of an insured event could cause the Group to make significant additional payments, i.e. if the occurrence
of the event causes significantly higher cash out flows for the Group than its non-occurrence.
Certain contracts, which are both insurance and investment, can contain discretionary features representing the contractual right to receive
additional benefits as a supplement to guaranteed benefits under certain conditions, being:
\u2022 that the additional benefits are a significant portion of the total contractual benefits
\u2022 the timing and amount of the additional benefits is at the discretion of the Group
\u2022 that the additional benefits are contractually dependent upon the performance of an entity, fund or specified pool of assets.
Insurance contracts and investment contracts with such discretionary participation features are accounted for under IFRS 17, while
investment contracts without discretionary participation features are accounted for as financial instruments under IFRS 9.
Judgement is therefore required in order to establish whether any additional benefits in an insurance or investment contract meet the above
requirements for being considered discretionary participation features.
Consolidation (Notes 41-43): Assessment of whether the Group controls underlying entities and should therefore consolidate them.
The assessment takes account of various criteria, including decision-making ability, equity holding and the rights to a variable return from
the\u00a0entity.
Control arises when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect
those returns through its power over the entity.
For operating entities this generally accompanies a shareholding of 50% or more in the entity. Subsidiaries that are consolidated where the
Group owns less than 50% of the ordinary share capital (structured entities), are consolidated based on an assessment of control normally
arising from special rights attaching to the class of share owned, other contractual arrangements and factors such as the purpose of the
investee, the nature of its relevant activities, voting rights (including potential voting rights) and substantive and protective rights.
The Group invests in various fund and unit trust entities where it also acts as the asset manager to those entities. In these instances, in
determining whether the Group controls the entities, the assessment focuses on the aggregate economic interests of the Group (direct
interest and expected management fees) and on whether the Group acts as a principal or agent. This includes an assessment of the removal
rights of other investors (their practical ability to allow the Group not to control the fund). Additionally, holdings in such investments can
fluctuate on a daily basis according to\u00a0the participation of the Group and other investors in them. As a result, in determining control, we look
at an assessment of these factors over a\u00a0longer period to mitigate the impact of daily fluctuations which do not reflect the wider facts and
circumstances of the Group\u2019s involvement. This\u00a0is performed in line with the following principles:
\u2022 where the entity is managed by a Group asset manager and the Group\u2019s ownership holding in the entity exceeds 50%, the Group is judged
to\u00a0have control over the entity
\u2022 where the entity is managed by a Group asset manager and the Group\u2019s ownership holding in the entity is between 30% and 50%, the
facts and\u00a0circumstances of the Group\u2019s involvement in the entity are considered, including the rights to any fees earned by the asset
manager from\u00a0the entity, in forming a judgement as to whether the Group has control over the entity
\u2022 where the entity is managed by a Group asset manager and the Group\u2019s ownership holding in the entity is less than 30%, the Group is
judged to\u00a0not have control over the entity, but again the facts and circumstances of the Group\u2019s involvement in the entity are considered.
The following sets out information about the critical accounting assumptions made by the Group about the future and other major sources
of\u00a0estimation uncertainty at the end of the reporting period, that have a significant risk of resulting in a material adjustment to the carrying
amounts of assets and liabilities within the next financial year:
Valuation of insurance contract liabilities (Notes 20-22)
The key judgements around the valuation of insurance contract liabilities relate to the following assumptions:
\u2022 determination of the longevity, mortality and morbidity assumptions used in the calculation of the insurance contract liabilities; the
assumptions for the rate of future longevity, mortality and morbidity are based on the Group\u2019s internal experience and judgements
about how experience may vary in the future. This assessment takes into account market benchmarking, internal experience studies
and independent industry data. The long-term assumptions are adjusted to reflect the Group\u2019s view on the effects of the Covid-19
pandemic on claims experience in the medium to long-term, informed by emerging experience and industry studies
\u2022 determination of the directly attributable expense assumptions used in the calculation of the insurance liabilities. These represent the
expected future costs that relate directly to the fulfilment of the underlying insurance policies and are based on management\u2019s best
estimate of these future costs and on an appropriate allocation between servicing new and existing business
\u2022 determination of valuation interest rates used to discount the liabilities, which are sensitive to the assumptions made, for example, on
credit default of the backing assets. These assumptions take into account consideration of market experience and historic internal data.
The valuation interest rate is also sensitive to the selection of the reference portfolio of assets chosen to back the liabilities
\u2022 determination of the compensation required for bearing the uncertainty about the amount and timing of the cash flows arising from
non-financial risks as insurance contracts are fulfilled, in the calculation of the risk adjustment
\u2022 determination of the weighting of the coverage units, used to calculate the CSM amortisation in the year, between the payment phase
and\u00a0the\u00a0deferral phase for deferred annuities. Judgement is required to combine the different coverage units so that they fairly reflect
the\u00a0services\u00a0provided
\u2022 determination of the transition date CSM under IFRS 17 incorporated judgement. In particular, judgements made in the calculation of the
CSM\u00a0for portfolios transitioned using the fair value approach at 1 January 2022 continue to be a component of the current valuation of
the\u00a0CSM\u00a0until those portfolios expire.
Note 21 includes a sensitivity analysis on post-tax Group profit and Group equity to reasonable alternative assumptions.
Valuation of unquoted illiquid assets and investment property (Note 13)
Determination of fair value of unquoted and illiquid assets and investment property involves judgements in model valuations, through the
incorporation of both observable and unobservable market inputs, which include assumptions that lead to the existence of a range of
plausible valuations for financial assets.
In assessing asset valuation, in line with applicable standards and guidance, the Group has both projected the short-term impact on earnings
and\u00a0cash flows of the current market volatility, while continuing to review the assets\u2019 ability to deliver longer term returns aligned to their
investment cases.
Note 21 includes a sensitivity analysis on the fair value of unquoted illiquid assets and investment property to reasonable alternative assumptions.
(vii) Consideration of climate change
The Group recognises emerging risks from both climate change and nature loss and the interrelationship between our climate and the
natural world. Climate change is the Group\u2019s most material sustainability issue, but the Group continues to develop its understanding
of its impacts and dependencies on nature, concurrently with its consideration of the impacts from climate change.
The Group is exposed to climate change through two broad categories: transition risks from the move to a low-carbon economy and the
impact this has on asset valuation and the economy; and physical risks from the impact on asset holdings as a result of severe weather
events and longer-term shifts in climate.
The Group has integrated climate risk management into its governance framework and has carried out a detailed assessment of how we
could expect climate risk to emerge across our business model. The Group risk mitigation strategy includes setting portfolio carbon intensity
targets, integrating carbon controls into the investment processes through stock exclusions and high carbon escalation, corporate engagement
and implementing high energy efficiency standards into the Group\u2019s directly owned commercial property and housing businesses.
The Group is committed to net zero, promoting a 1.5\u00b0C \u2018Paris-aligned transition\u2019. In order to meet its environmental goals, the Group has set
for itself a\u00a0number of targets and commitments, clearly linked with its business strategy and risk management controls. These are based on
the three key areas of our Group-wide activity, as an asset owner, an asset manager and in our own operations. Metrics and targets have
been defined around the Group\u2019s operational carbon footprint, investment portfolio economic carbon intensity and implied portfolio temperature
alignment. These are being targeted through the decarbonisation of the Group\u2019s balance sheet, investing in the transition, development of
climate friendly investment products and focus on own operations. The Group also continues to drive greater action as an asset manager to
address financially material climate and nature risks in the real economy consistent with our fiduciary duty.
Scenario analysis is performed to help understand the strategic implications of possible climate pathways, including the key features of a
transition to a net zero economy. Plausible scenarios have been developed based on estimations of how the energy system may evolve over
the next 30 years, using the most recent carbon budgets from the Intergovernmental Panel on Climate Change\u2019s Sixth Assessment Report
(AR6) and incorporated latest data on technology costs. These include two different pathways to \u2018below 2\u00b0C\u2019 and a scenario assuming
achievement of net zero. Given the Group\u2019s long-term climate risk relates to transition risk, a fourth scenario assuming global failure to act
on climate change and emissions growth at historical rates has been modelled, but the impacts have not been applied to our portfolio. Such
impacts are driven by physical risks which tend to be highly localised and manifest further into the future and are therefore more uncertain.
However, more broadly on physical risks, our modelling capabilities allow us to assess how acute events, such as floods and storms in the
High emissions scenario, may affect asset values, operations, and long-term resilience, as considered in our investment due diligence and
valuation uncertainty analysis.
In preparing the consolidated financial statements, the Group has considered the impact of climate change and in particular the transition
to a lower carbon economy, on the valuation of the Group\u2019s assets and liabilities. In the Strategic report, with additional information in the
Group\u2019s Climate and nature report, we have set out in detail the various risks and opportunities that are created by this transition and how
they may impact the Group across various time horizons. In line with the recommendations of the Task Force on Climate-related Financial
Disclosures, we have further described the resilience of the Group\u2019s strategy, taking into consideration different climate-related scenarios, as
described above. There is no one single scenario that underpins the financial statements. The scenarios help challenge the Group\u2019s perspectives
on the future business and economic environment as a result of the transition to a lower carbon economy, including consideration of events
that may be only remotely possible. As a result, the scenarios covered are not intended to be predictions of likely future events or outcomes
and are not the basis on which the Group\u2019s consolidated financial statements have been prepared.
At the current time, the Group does not consider climate risk to represent a significant area of judgement or of estimation uncertainty.
As at 31 December 2025, no material impacts on the Group\u2019s financial position, nor on the valuation of assets or liabilities on the Group\u2019s
Consolidated Balance Sheet as a result of climate change risk have been identified. In arriving at this determination, the Group has in
particular taken into account the following areas of judgement, which we consider to be those most exposed to the potential impact of
climate change in the preparation of the financial statements:
Going concern and viability
In preparing the consolidated financial statements, the directors are required to assess the Group\u2019s ability to continue as a going concern, by
taking into account all available information related to at least 12 months from the date of their approval. Additionally, the preparation of the
viability statement takes into consideration the Group\u2019s overall business model and strategy, forecast financial strength and resilience and
the liquidity profile over the planning horizon. Climate-related matters have been considered as part of these assessments and have not
been deemed to create material uncertainties as to their conclusions or to require specific disclosure.
Valuation of Level 3 financial investments and investment property
The valuation of unquoted illiquid assets and investment property has been separately identified as an area of significant estimation
uncertainty. The assumptions used in the models underpinning these assets\u2019 valuations, such as cash flows forecasts, discount rates
and multiples, are often unobservable. Due to the need to apply significant judgements, these assumptions can be impacted by transition
risk, with climate-related inputs gaining more traction (e.g. construction methods and materials, EPC ratings, ESG credentials and climate
resilience). This is particularly relevant for the Group\u2019s Private Markets portfolio, including alternative assets. Where possible, the Group\u2019s
assets are valued using standard market pricing sources or appropriately qualified external valuers and therefore reflect current market
sentiments around climate risk. In this respect market and investor expectations have also been evolving, with greater demand towards
net zero-aligned assets and away from traditional carbon-intensive methods, impacting expected investor returns and therefore discount
rates and multiples. Exposure to the risks of climate change is minimised through rigorous assessment of potential investments and active
monitoring of the carbon intensity of the current portfolio. Additionally, investment properties are being reviewed by independent third
parties, where applicable, with regards to potential retrofitting, to help reduce carbon emissions and make them more efficient and
sustainable for the future.
Asset impairment and residual economic life
The carrying value of goodwill, intangible and certain tangible assets on the Consolidated Balance Sheet which are subject to impairment
testing\u00a0could be affected by climate change risk. For example, inventory may become obsolete or restricted, causing selling prices to decline
or\u00a0their costs of completion to increase. If, as a result, the cost of inventories is not recoverable, they would need to be written down to their
net\u00a0realisable value.
Property, plant and equipment, right-of-use assets, goodwill and intangible assets may see their recoverable amount decrease in light of
climate change and significant changes in the environment (including for example changes in regulation) in which the Group operates, where
adverse effects can represent an indication of impairment. The estimation of recoverable amount as \u2018value in use\u2019 requires an assessment of
future expected cash flows based on assumptions potentially affected by climate-related matters, particularly for goodwill and intangible
assets, which\u00a0are subject to a higher degree of judgement. Where assets are subject to amortisation or depreciation, consideration needs
to be given to\u00a0whether climate risk suggests that the residual economic life is shorter than anticipated, which would give rise to increased
charges in the income statement. Due to the nature of the Group\u2019s assets, we do not anticipate any material additional impairments or
increased amortisation and\u00a0depreciation charges to arise from climate change. Risks will continue to be monitored against judgements
and estimates used in the assessment of impairment.
Insurance contract liabilities
The Group\u2019s insurance contracts are valued using discount rates derived from the backing asset portfolios with deductions made to remove
risks\u00a0that are present in the assets but are not relevant to the insurance liability. Climate-related risks could impact on the Group\u2019s exposure
to\u00a0future credit losses which would impact on the appropriate yield deductions in the discount rate calculation and therefore the insurance
contract valuations.
Provisions and contingent liabilities
The recognition, measurement and disclosure of provisions and contingent liabilities is subject to setting assumptions around future
events and the probability of their occurrence. Climate-related matters could affect these elements, for example by requiring recognition
or disclosure of a legal obligation (e.g. levies imposed for failing climate-related targets) or of a constructive obligation (e.g. requirements
to remediate environmental damage caused by the Group\u2019s operations and investment portfolios).
Deferred tax assets
Deferred tax assets are recognised for deductible temporary differences and unused tax losses and credits, to the extent it is probable
that future taxable profit will be available, against which those amounts can be utilised. Climate-related matters could affect the Group\u2019s
estimate of future taxable profits and therefore it may be required to derecognise deferred tax assets previously on the balance sheet.
Share-based payments
The Group\u2019s performance share plans provide a direct and transparent link between executive pay and the delivery of shareholder returns
over the longer term. They are a conditional award of shares subject to a performance period of at least three years. Performance metrics
for the Group\u2019s share plans are now clearly linked to ESG metrics.
Financial instruments
Expected credit losses are required to be recognised on receivables and certain financial investments, representing the counterparty\u2019s
probability\u00a0of default over a certain time horizon. Climate-related matters may affect the Group\u2019s exposure to these losses, for example
by\u00a0negatively affecting the borrower\u2019s ability to meet their obligations, or by affecting assumptions used in the models adopted to estimate
expected credit losses.
(viii) Material accounting policies
Consolidation principles
Subsidiary undertakings
The consolidated financial statements incorporate the assets, liabilities, equity, income, expenses and cash flows of the Company and of its
subsidiary undertakings drawn up to 31 December each year. All intra-group balances, transactions, income and expenses are eliminated in full.
Subsidiaries are those entities (including special purpose entities, mutual funds and unit trusts) over which the Group directly or indirectly
has control (i.e. when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to
affect those returns through its power over the investee) (Note 42).
Business combinations are accounted for by applying the acquisition method of accounting, which requires the Group to record the
identifiable assets and liabilities of the acquired business at fair value on the date of acquisition. The excess of the fair value of acquisition
consideration over\u00a0the recorded value of the assets and liabilities of the acquired entity is recorded on the statement of financial position
as goodwill. Profits or\u00a0losses of subsidiary undertakings sold or acquired during the year are included in the consolidated results up to the
date of disposal or from the\u00a0date of gaining control.
Puttable instruments held by external parties in consolidated investment vehicles, such as unit trusts, are classified as liabilities and appear
as\u00a0Net asset value attributable to unit holders\u2019 in the Consolidated Balance Sheet.
Associates and joint ventures
Associates are entities over which the Group has significant influence but which it does not control. It is presumed that the Group has
significant influence where it has between 20% and 50% of the voting rights in the investee unless indicated otherwise. Joint ventures
are entities where the Group and other parties have joint control over their activities.
The Group has interests in associates and joint ventures (Note 41) which form part of an investment portfolio held through private equity
vehicles, mutual funds, unit trusts and similar entities. In accordance with the choice permitted by IAS 28, \u2018Investments in Associates
and Joint Ventures\u2019, these interests have been classified as fair value through profit or loss and measured at fair value within financial
investments, with changes in fair\u00a0value recognised in the Consolidated Income Statement.
Associates and joint ventures which do not form part of an investment portfolio are initially recognised in the Consolidated Balance Sheet
at\u00a0cost. Goodwill arising on the acquisition of these associates or joint ventures is included within the carrying value of those investments.
Their carrying amount is increased or decreased to reflect the Group\u2019s share of total comprehensive income after the date of the acquisition.
Where the carrying amount of an associate or joint venture is greater than its estimated recoverable amount, which is the higher of the assets
fair value less costs of disposal and value in use, it is written down immediately to its recoverable amount, with an impairment loss
recognised in the Consolidated Income Statement.
Insurance contracts
Long term insurance contracts \u2013 initial measurement
Insurance contracts are contracts which transfer significant insurance risk to the insurer at the inception of the contract. This is the case if
and\u00a0only if, an insured event could cause an insurer to make significant additional payments in any scenario, other than a scenario which
lacks commercial substance. Such contracts remain insurance contracts until all rights and obligations are extinguished or expired.
At inception, the Group separates the following components from an insurance or reinsurance contract and accounts for them as if they
were stand-alone financial instruments:
\u2022 derivatives embedded in the contract whose economic characteristics and risks are not closely related to those of the host contract
and\u00a0whose\u00a0terms would not meet the definition of an insurance or reinsurance contract as a stand-alone instrument
\u2022 distinct investment components, i.e. investment components that are not highly inter-related with the insurance components and for
which contracts with equivalent terms are sold, or could be sold, separately in the same market or the same jurisdiction.
After separating any financial instrument components, the Group separates any promises to transfer to policyholders distinct goods or
services other than insurance coverage and investment services and accounts for them as separate contracts with customers (i.e. not as
insurance contracts).
A good or service is distinct if the policyholder can benefit from it either on its own or with other resources that are readily available to\u00a0
the policyholder. A good or service is not distinct and is accounted for together with the insurance component if the cash flows and risks
associated with the good or service are highly inter-related with the cash flows and risks associated with the insurance component and
the Group\u00a0provides a significant service of integrating the good or service with the insurance component.
Recognition and level of aggregation
An insurance contract is recognised at the earliest of the following:
(a) the beginning of the coverage period
(b) the date when the first payment from a policyholder becomes due
(c) for onerous contracts, when the contract becomes onerous.
The level of aggregation determines the unit of account at which IFRS 17 calculations are performed. This is determined firstly by dividing
the business written into portfolios. Portfolios comprise groups of contracts with similar risks which are managed together. Portfolios are
further divided based on expected profitability at inception into three categories: onerous contracts, contracts with no significant risk of
subsequently becoming onerous and the remainder. IFRS 17 also requires that no group for level of aggregation purposes may contain
contracts issued more than one year apart. The insurance contract disclosures have been aggregated at the level of the major product
lines of the business, annuities and protection. This disaggregation reflects their similar main characteristics and avoids the presentation
of insignificant detail.
All of the Group\u2019s in scope insurance contracts are accounted for under the general measurement model which measures a group of
insurance contracts as the total of:
\u2022 fulfilment cash flows
\u2022 CSM representing the unearned profit the Group will recognise as it provides services under the insurance\u00a0contract.
Fulfilment cash flows
Fulfilment cash flows comprise unbiased and probability-weighted estimates of future cash flows, discounted to present value to reflect the
time value of money and financial risks, plus a risk adjustment for non-financial risk. The Group\u2019s objective in estimating future cash flows is
to determine the expected value, or the probability weighted mean, of the full range of possible outcomes, considering all reasonable and
supportable information available at the reporting date without undue cost or effort. The Group estimates future cash flows considering a
range of scenarios which have commercial substance and give a good representation of possible outcomes. The cash flows from each
scenario are probability-weighted and discounted using current assumptions.
When estimating future cash flows, the Group includes all cash flows that are within the contract boundary. The cash flows include:
\u2022 premiums and related cash flows
\u2022 claims and benefits, including reported claims not yet paid, incurred claims not yet reported and expected future claims
\u2022 investment management costs incurred in the provision of an investment return service or to enhance the benefits of an insurance contract
\u2022 payments to policyholders resulting from embedded surrender value options
\u2022 an allocation of insurance acquisition cash flows attributable to the portfolio to which the contract belongs
\u2022 claims handling costs
\u2022 policy administration and maintenance costs, including recurring commissions that are expected to be paid to intermediaries for future services
\u2022 an allocation of fixed and variable overheads directly attributable to fulfilling insurance contracts
\u2022 transaction-based taxes.
The Group incorporates, in an unbiased way, all reasonable and supportable information available without undue cost or effort about the
amount, timing and uncertainty of those future cash flows. The Group estimates the probabilities and amounts of future payments under
existing contracts based on information obtained, including:
\u2022 information about claims already reported by policyholders
\u2022 other information about the known or estimated characteristics of the insurance contracts
\u2022 historical data about the Group\u2019s own experience, supplemented when necessary, with data from other sources (historical data is adjusted
to\u00a0reflect current conditions)
\u2022 current pricing information, when available.
The measurement of fulfilment cash flows includes insurance acquisition cash flows which are allocated as a portion of premium to profit
or loss (through insurance revenue) over the period of the contract.
Pre-recognition, insurance acquisition cash flow assets are recognised on the balance sheet prior to allocation to new insurance contracts
and are considered for impairment at each reporting date.
Risk adjustment
The risk adjustment for non-financial risk for a group of insurance contracts reflects the compensation that the Group would require for
bearing uncertainty about the amount and timing of the cash flows that arises from non-financial risk after diversification. The Group\u2019s risk
adjustment is calibrated using a Value at Risk (VAR) methodology. In some cases, the compensation for risk on reinsured business is linked
directly to the price paid for reinsurance.
Discounting
The insurance contract fulfilment cash flows are discounted at rates that reflect the characteristics of the insurance contract liabilities.
These\u00a0are\u00a0determined by starting from an appropriate asset portfolio with deductions to remove risks in the assets that are not present
in\u00a0the\u00a0insurance liabilities.
Contractual service margin (CSM)
The Group\u2019s CSM is a component of the asset or liability for the group of insurance contracts that represents the unearned profit the Group
will\u00a0recognise as it provides services in the future. The Group measures the CSM on initial recognition at an amount that, unless the group
of\u00a0contracts is onerous, results in no income or expenses arising from:
\u2022 initial recognition of the fulfilment cash flows
\u2022 any cash flows arising from the contracts in the Group at that date
\u2022 the derecognition at the date of initial recognition of:
\u2013 any asset for insurance acquisition cash flows
\u2013 any other asset or liability previously recognised related to the group of insurance contracts.
Onerous contracts
For groups of contracts assessed as onerous, the Group recognises a loss in profit or loss for the net outflow, resulting in the carrying amount
of\u00a0the liability for the Group being equal to the fulfilment cash flows and the CSM of the Group being zero. A loss component is established
by the\u00a0Group for the liability for remaining coverage for an onerous group, which represents the losses recognised.
Reinsurance contracts \u2013 initial measurement
The initial measurement of reinsurance contracts held follows the same principles as those for insurance contracts issued, with the exception
of\u00a0the following:
\u2022 reinsurance contracts are recognised from the earlier of the following:
\u2013 the beginning of the coverage period
\u2013 the date the entity recognises an onerous group of underlying insurance contracts, if the entity entered into the related reinsurance
contract\u00a0held in the group of reinsurance contracts held at or before that date.
\u2022 measurement of the cash flows includes an allowance on a probability-weighted basis for the effect of any non-performance by the
reinsurers, including the effects of collateral and losses from disputes
\u2022 the Group determines the risk adjustment for non-financial risk so that it represents the amount of risk being transferred to the reinsurer
\u2022 both day one gains and day one losses are not recognised at initial recognition in the statement of financial position but are deferred into
the\u00a0CSM and released to profit or loss as the reinsurer renders services, except for any portion of a day 1 loss that relates to events before
initial\u00a0recognition
\u2022 if the reinsurance contract is recognised prior to a loss-making underlying contract, the reinsurance CSM can be adjusted to offset a portion of
the inception loss (the loss recovery component). This offsets a portion of the loss recognised on inception of the underlying onerous contract.
Long term insurance contracts \u2013 subsequent measurement
The Group measures the carrying amount of a group of insurance contracts at the end of each reporting period as the sum of:
(i) the liability for remaining coverage comprising fulfilment cash flows related to future service allocated to the Group at that date and the
CSM of the Group at that date
(ii) the liability for incurred claims for the Group reflecting the fulfilment cash flows related to past service allocated to the Group at that date.
Contractual service margin \u2013 measurement
The CSM at the end of the reporting period represents the profit in the group of insurance contracts that has not yet been recognised
in profit or loss, because it relates to future service to be provided.
For a group of insurance contracts the carrying amount of the CSM of that group at the end of the reporting period equals the carrying
amount at\u00a0the beginning of the reporting period adjusted for:
\u2022 the effect of any new contracts added
\u2022 interest accreted on the carrying amount of the CSM during the reporting period, measured at the discount rates at initial recognition
\u2022 changes in fulfilment cash flows relating to future service, except to the extent that:
\u2013 such increases in the fulfilment cash flows exceed the current carrying amount of the CSM, giving rise to a loss; or
\u2013 such decreases in the fulfilment cash flows are allocated to the loss component of the liability for remaining coverage
\u2022 the amount recognised as insurance revenue because of the transfer of services in the period, determined by allocation of the CSM
at the end of the period over the current and remaining coverage period
\u2022 the effect of any currency exchange differences on the CSM.
The changes in fulfilment cash flows relating to future service that adjust the CSM comprise:
\u2022 experience adjustments that arise from the difference between the premium receipts (net of refunds) and any related cash flows such as
insurance acquisition cash flows and insurance premium taxes and the estimate, at the beginning of the period, of the amounts expected.
Differences related to premiums received (or due) in respect of current or past services are recognised immediately in profit or loss while
differences related to premiums received (or due) for future services are adjusted in the CSM
\u2022 changes in estimates of the present value of future cash flows in the liability for remaining coverage, except those relating to the time value
of\u00a0money and changes in financial risk (which are instead recognised in the statement of profit or loss and other comprehensive income)
\u2022 differences between any investment component expected to become payable in the period and the actual investment component that
becomes payable in the period
\u2022 changes in the risk adjustment for non-financial risk that relate to future service.
Adjustments to the CSM noted above are measured at discount rates that reflect the characteristics of the cash flows of the group of
insurance contracts at initial recognition (i.e. the weighted average of the rates applicable at the date of initial recognition of contracts
that joined a group over a 12-month period).
Onerous contracts
Groups of contracts that were not onerous at initial recognition can subsequently become onerous if assumptions and experience extinguish
the CSM. In this case, the Group establishes a loss component for the future losses recognised. The loss component is released based on
a systematic allocation of the subsequent changes in the fulfilment cash flows to: (i) the loss component; and (ii) the liability for remaining
coverage excluding the loss component. The loss component is also updated for subsequent changes in estimates of the fulfilment cash
flows related to future service. The systematic allocation of subsequent changes to the loss component results in the total amounts allocated
to the loss component being equal to zero by the end of the coverage period of a group of contracts (since the loss component will have
materialised in the form of incurred claims). The loss component ensures that over the duration of the contract, the correct amounts are
recognised as insurance revenue and insurance service expenses.
Contractual service margin (CSM) \u2013 recognition
The amount of CSM recognised in the income statement for a group of insurance contracts reflects the insurance contract services provided.
The proportion of the CSM earned is calculated as the amount of coverage units provided in the period divided by the sum of\u00a0all\u00a0the future and
current period coverage units. The Group has elected to discount the future coverage units in this calculation. The table below\u00a0indicates the main
insurance contracts services provided under the Group\u2019s insurance contracts and selected coverage unit(s) used to\u00a0measure those services.
Insurance contract
Insurance service
Coverage unit(s)
Immediate annuity
Payment of insurance claims
Expected annual claims payments
Deferred annuity
Payment of insurance claims (payment phase)
Investment return service (deferral phase)
Lump sum death benefits (deferral phase)
Expected annual claims payments
Expected investment return on backing assets
Sum assured
Longevity swaps
Payment of floating leg of swap
Expected annual floating leg payments
Retail Protection
Potential mortality or morbidity claims
Sum assured
Group Protection
Potential mortality or morbidity claims
Sum assured
Where a specific unit of account contains a mixture of services and therefore coverage units, it is necessary to weight the coverage units so
that the resulting profile of CSM release reflects the overall package of benefits provided. This is particularly pertinent to units of account
incorporating a combination of immediate and deferred annuities. Under IFRS 17, deferred annuities usually provide multiple services, split
between the two phases of benefit provision (the deferral phase and the payment phase). Judgement is therefore required to combine the
different coverage units so that they fairly reflect the services provided. The weighting between the deferral phase and the payment phase
coverage units is calculated so that the services provided in the deferral phase reflect the investment return provided and the probability
weighted delivery of any lump sum death benefits, both adjusted so that all of the CSM is earned in the deferral phase for all contracts
which do not enter the payment phase either through transfer out, withdrawal of funds or death.
Investment components
The Group identifies the investment component of a contract by determining the amount that it would be required to repay to the policyholder
in all scenarios with commercial substance. Investment components are not included in insurance revenue and insurance service expenses.
Insurance finance income and expense
Insurance finance income and expenses comprise changes in the carrying amounts of groups of insurance contracts arising from the effects
of the time value of money, financial risk and changes therein. IFRS 17 requires an accounting policy decision as to whether to recognise all
finance income or expense in profit or loss, or whether to disaggregate the income or expense that relates to changes in financial assumptions into
other comprehensive income. Finance income and expense has been included in profit or loss for all insurance products except for the
Group\u2019s protection business where it has been disaggregated between profit and loss and other comprehensive income. Where insurance
finance income and expense has been disaggregated the amount included in profit or loss is determined by a systematic allocation of the
expected total insurance finance income or expenses over the duration of the group of contracts, using the discount rates determined on
initial recognition.
Changes in the risk adjustment for non-financial risk have been disaggregated between insurance service result and insurance finance
income and expenses.
Reinsurance contracts held \u2013 subsequent measurement
The subsequent measurement of reinsurance contracts held follows the same principles as those for insurance contracts issued except that
changes in the fulfilment cash flows are recognised in profit or loss if the related changes arising from the underlying ceded contracts are
recognised in profit or loss.
Derecognition and contract modification of insurance contracts
The Group derecognises a contract when it is extinguished, i.e. when the specified obligations in the contract expire or are discharged
or cancelled.
The Group also derecognises a contract if its terms are modified in a way that would have changed the accounting for the contract
significantly had the new terms always existed, in which case a new contract based on the modified terms is recognised. If a contract
modification does not\u00a0result in derecognition, then the Group treats the changes in cash flows caused by the modification as changes
in estimates of fulfilment cash\u00a0flows.
Measurement on transition to IFRS 17
On transition to IFRS 17, the insurance contract liabilities were restated, retrospectively applying the Group\u2019s accounting policies. In line with
the provisions available in IFRS 17, the Group applied the full retrospective approach unless impracticable. The full retrospective approach
required the Group to:
\u2022 identify, recognise and measure each group of insurance and reinsurance contracts as if IFRS 17 had always applied
\u2022 derecognise any existing balances that would not exist had IFRS 17 always applied
\u2022 recognise any resulting net difference in equity.
If it was impracticable to apply a full retrospective approach to a group of contracts then the Group selected an approach between the
modified retrospective approach and the fair value approach. If the Group could not obtain reasonable and supportable information
necessary to apply the\u00a0modified retrospective approach, then the fair value approach was selected.
Full retrospective approach
For insurance and reinsurance contracts where the full retrospective approach was adopted, the best estimate and risk adjustment components
of fulfilment cash flows were recognised and measured using the Group\u2019s accounting policies from the inception date of the contracts to the
date of transition. The full retrospective approach was determined to be impracticable where: the effects of retrospective application were not
determinable because information required was not collected (or not with sufficient granularity);`application would require the application of
hindsight; or information was unavailable because of system migrations, data retention requirements or other reasons.
Modified retrospective approach
The objective of the modified retrospective approach is to achieve the closest outcome to retrospective application possible using reasonable
and\u00a0supportable information available without undue cost or effort. For insurance and reinsurance contracts where the modified retrospective
approach has been adopted, the best estimate and risk adjustment components of fulfilment cash flows were recognised and measured
using the Group\u2019s accounting policies at the date of transition except for the application of a permitted transition modification that, for some
groups of contracts issued before 1 January 2021, the risk adjustment for non-financial risk on initial recognition was determined by adjusting
the amount at\u00a01 January 2022 for the expected release of risk before that date. The expected release was determined with reference to the
release of risk of similar contracts that the Group issued in 2022. This modification was used to avoid the application of hindsight to the
calibration of the risk adjustment in prior periods.
Fair value approach
For insurance and reinsurance contracts where the fair value approach has been adopted, the best estimate and risk adjustment components
of\u00a0fulfilment cash flows were determined as at 1 January 2022. The Group determined the contractual service margin (CSM) of the liability
for remaining coverage at the transition date, as the difference between the fair value of the group of insurance contracts and the fulfilment
cash flows measured at that date. In determining fair value, the Group applied the requirements of IFRS 13, \u2018Fair Value Measurement\u2019, except
for the demand deposit floor requirement.
Financial instruments
Recognition and derecognition
Initial recognition of financial assets and liabilities is on the trade date, which is the date on which the Group becomes a party to the
contractual provisions of the instrument. A financial asset or financial liability is initially measured at fair value plus, for a financial asset or
financial liability not\u00a0measured at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issue.
When the fair value of\u00a0financial assets and liabilities differs from the transaction price on initial recognition, the Group recognises the
difference as follows:
\u2022 when the fair value is evidenced by a quoted price in an active market for an identical asset or liability (i.e. a Level 1 input) or based
on\u00a0a\u00a0valuation technique that uses only data from observable markets, the difference is recognised as a gain or loss
\u2022 in all other cases, the difference is deferred and the timing of recognition of deferred day one profit or loss is determined individually.
It is either amortised over the life of the instrument, deferred until the instrument\u2019s fair value can be determined using market observable
inputs or realised through settlement.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when the Group transfers
substantially all the risks and rewards of ownership to another entity. This is the case for cash collateral pledged, where the counterparty
has contractual rights to receive the cash flows generated and which is derecognised from the Consolidated Balance Sheet and a
corresponding receivable recognised for its return.
The Group enters into transactions whereby it transfers assets recognised in its Consolidated Balance Sheet, but retains either all or
substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognised. Examples
of such transactions are repurchase agreements and non-cash collateral pledged, unless the Group defaults on its obligations under the
relevant agreement.
In transactions in which the Group neither retains nor transfers substantially all of the risks and rewards of ownership of a financial asset
and it retains control over the asset, the Group continues to recognise the asset to the extent of its continuing involvement, determined
by the extent to\u00a0which it is exposed to changes in the value of the transferred asset.
The Group derecognises a financial liability when its contractual obligations expire or are discharged or cancelled. The Group also
derecognises a\u00a0financial liability when its terms are modified and the cash flows of the modified liability are substantially different,
in which case a new financial liability based on the modified terms is recognised at fair value.
On derecognition of a financial asset or financial liability, the difference between the carrying amount at the date of derecognition and the
consideration received (including any new asset obtained less any new liability assumed) is recognised in profit or loss.
Modification
If the terms of a financial asset are modified, then the Group evaluates whether the cash flows of the modified asset are substantially
different. If\u00a0the cash flows are substantially different, then the contractual rights to cash flows from the original financial asset are deemed
to have expired. In this case, the original financial asset is derecognised and a new financial asset is recognised at fair value plus any eligible
transaction costs.
Classification and measurement of financial assets
The Group classifies its financial assets on initial recognition as measured at amortised cost, fair value through other comprehensive income
(FVOCI) and fair value through profit or loss (FVTPL).
The classification and measurement of financial assets depends on their contractual cash flow characteristics and how they are managed
(the entity\u2019s business model). The contractual cash flow characteristics test aims to identify those assets with cash flows consistent with a
basic lending arrangement, i.e. which are \u2018solely payments of principal and interest\u2019 (SPPI). The business model test refers to how an entity
manages its financial assets with the objectives of generating cash flows. These factors determine whether the financial assets are measured
at amortised cost, FVOCI or FVTPL. Assets are therefore typically characterised as follows:
\u2022 amortised cost: financial assets with contractual terms that give rise solely to interest and principal cash flows and which are held in a
business model whose objective is to hold the assets to collect their cash flows. They are measured at amortised cost using the effective
interest method. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on
derecognition is also recognised in profit or loss
\u2022 FVOCI: financial assets with contractual terms that give rise solely to interest and principal cash flows and which are held in a business
model whose objective is achieved by holding the assets to collect their cash flows and selling them. Interest income calculated using the
effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses
are recognised in other comprehensive income. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss
\u2022 FVTPL: all other financial assets. Net gains and losses, including any interest or dividend income and foreign exchange gains and losses,
are\u00a0recognised in profit or loss, unless they arise from derivatives designated as hedging instruments in cash flow or net investment hedges.
Notwithstanding the above, on initial recognition the Group may irrevocably designate to FVTPL a financial asset that would otherwise be
measured at amortised cost or FVOCI if doing so eliminates or greatly reduces an accounting mismatch.
In making the SPPI assessment, the Group considers whether the contractual cash flows are consistent with a basic lending arrangement (that
is, interest includes only consideration for the time value of money, credit risk, other basic lending risks and a profit margin that is consistent with
a basic lending arrangement). This includes evaluating whether the financial asset contains a contractual term that could change the timing or
amount of contractual cash flows such that it would not meet this condition. Examples of such contractual terms to be considered are contingent
events that would change the amount or timing of cash flows, leverage features, prepayment and extension features, non-recourse asset
arrangements and features that modify consideration for the time value of money (e.g. periodic reset of interest rates).
The business model reflects how the Group manages assets in order to generate cash flows, i.e. it reflects whether the Group\u2019s objective
is solely to collect the contractual cash flows from assets or to collect both the contractual cash flows and cash flows arising from the sale
of assets. If neither of these is applicable (for example, financial assets are held for trading purposes), the business model is \u2018other\u2019 and the
financial asset is measured at FVTPL. Factors considered by the Group in determining the business model for a group of assets include past
experience on how the cash flows for these assets were collected, how the asset\u2019s performance is evaluated and reported to key
management personnel, how risks are assessed and managed and how managers are compensated.
The objective of the Group\u2019s business model for certain debt instruments, in particular those instruments backing annuity or investment
contract liabilities, including surplus assets, is to fund its liabilities. Consistent with the Group\u2019s investment strategy their performance is
evaluated on a total return basis, as significant buying and selling activity is undertaken on a regular basis to rebalance its portfolio and
to ensure that contractual cash flows from those assets are sufficient to settle the underlying liabilities. These investments do not follow a
\u2018held to collect\u2019 or \u2018held to collect and sell\u2019 business model and are therefore accounted for at FVTPL. This business model is also applicable
to reverse repurchase agreements and to derivatives. Equity instruments are accounted for at FVTPL.
Certain debt securities are held in separate portfolios for long-term yield. These include long-dated debt instruments backing annuities
liabilities, but in surplus to the IFRS 17 best estimate liability and risk adjustment, used to manage interest and inflation rate exposure, as
well as assets backing protection liabilities. These assets represent instruments consistent with the SPPI principles and are accounted for
at amortised cost or\u00a0FVOCI depending on the expected level of trading.
Receivables are accounted for at amortised cost.
Classification and measurement of financial liabilities
The Group classifies and subsequently measures financial liabilities at amortised cost or FVTPL.
Investment contract liabilities
Investment contract liabilities are measured at FVTPL. This is because these liabilities, as well as the related assets, are managed and their
performance evaluated on a fair value basis. For unit linked liabilities, fair value is determined by reference to the value of the underlying net
asset values of the Group\u2019s unitised investment funds at the balance sheet date.
Core and operational borrowings
Borrowings are recognised initially at fair value, net of transaction costs. Borrowings are subsequently stated at amortised cost. The
difference between the net proceeds and the redemption value is recognised in the income statement over the borrowing period using
the effective interest rate method.
Other financial liabilities
Other financial liabilities include derivative liabilities, repurchase agreements and trail commission, which are measured at FVTPL, while
other payable balances are measured at amortised cost.
Derivatives
Derivatives are initially recognised at fair value on the date on which the derivative contract is entered into. The Group\u2019s derivatives, other
than those designated as hedging instruments in cash flow or net investment hedges, are instruments held for trading and, are therefore
accounted for\u00a0at FVTPL.
Derivatives may be embedded in another contractual arrangement. If such a hybrid contract contains a host that is a financial asset, the
Group assesses the entire contract for classification and measurement purposes. Otherwise, the Group accounts for an embedded derivative
separately from the host contract when:
\u2022 its economic characteristics and risks are not closely related to those of the host contract
\u2022 the terms of the embedded derivative would have met the definition of a derivative if they were contained in a separate contract
\u2022 the hybrid contract is not measured at FVTPL.
These embedded derivatives are separately accounted for at FVTPL, unless the Group chooses to designate the entire hybrid contract at FVTPL.
A derivative embedded in a host insurance or reinsurance contract is not accounted for separately from the host contract if the embedded
derivative itself meets the definition of an insurance or reinsurance contract.
Collateral
Collateral received in the form of cash, which is not legally segregated from the Group, is recognised as an asset in the Consolidated Balance
Sheet with a corresponding liability for the repayment in Payables and other financial liabilities. However, where the Group has a currently
enforceable legal right of set-off and the ability and intent to net settle, the collateral liability and associated derivative balances are shown net.
Non-cash collateral received is not recognised in the Consolidated Balance Sheet unless the transfer of the collateral meets the derecognition
criteria from the perspective of the transferor. Such collateral is typically recognised when the Group either: (a) sells or repledges these assets
in the absence of default, at which point the obligation to return this collateral is recognised as a liability; or (b) the counterparty to the
arrangement defaults, at which point the collateral is seized and recognised as an asset.
Collateral pledged in the form of cash, which is legally segregated from the Group, is derecognised from the statement of financial position
with a\u00a0corresponding receivable recognised for its return. Non-cash collateral pledged is not derecognised from the statement of financial
position unless the Group defaults on its obligations under the relevant agreement and therefore continues to be recognised in the
Consolidated Balance Sheet within Financial investments.
Impairment of financial assets
The Group assesses on a forward-looking basis the expected credit loss (ECL) associated with its financial assets measured at amortised
cost and FVOCI and recognises a loss allowance for such losses at each reporting date. Expected credit losses are defined as the present
value of the difference between all contractual cash flows that are due and all cash flows that the entity expects to receive (i.e. the cash
shortfall), weighted based on their probability of occurrence. The loss allowance recognised under IFRS 9 can be equal to an amount
corresponding to a 12-month ECL or a lifetime ECL. A lifetime ECL is the ECL resulting from all possible default events over the expected
life of the financial asset; a 12-month ECL is the portion of lifetime ECL resulting from default events on a financial asset that are possible
within the 12 months after the reporting date. For a financial asset that is credit-impaired at the reporting date, but that is not a purchased or
originated credit-impaired financial asset, expected credit losses are measured as the difference between the asset\u2019s gross carrying amount
and the present value of estimated future cash flows, discounted at the financial asset\u2019s original effective interest rate. Any adjustment is
recognised in profit or loss as an impairment gain or loss.
The Group defines default on a financial asset as the inability to meet in full and on time an original promise of expected cash flows,
the amount and timing of which are defined with certainty. Any breach of this promise, by any amount or time (in excess of any potential
planned grace period), constitutes a default. This is consistent with the definition of default used for internal credit risk management
purposes. An asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of
that financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable data:
\u2022 significant financial difficulty of the borrower
\u2022 a breach of contract, such as a default or past due event
\u2022 the restructure of a loan by the Group on terms which it would not otherwise consider
\u2022 it becomes probable that the borrower will enter bankruptcy or other financial reorganisation.
A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.
The ECL model is run from the date of initial recognition of a financial asset and its output updated at every reporting period, even if no actual
loss events have taken place. The impact of updating the inputs of the ECL model in the reporting period is recognised in profit or loss directly
where it affects the carrying value of financial assets at amortised cost, while for assets at FVOCI an equal and opposite movement is
recorded in other comprehensive income.
In order to determine whether the Group measures ECLs at an amount equal to 12-month ECL or lifetime ECL, at each reporting period
the Group is required to assess which \u2018stage\u2019 a financial asset falls into. Stages reflect the general pattern of deterioration in credit risk
of a financial instrument that ultimately defaults, as follows:
\u2022 Stage 1 includes financially healthy financial assets that are expected to perform in line with their contractual terms and which have
no signs of\u00a0increased credit risk
\u2022 Stage 2 includes financial assets for which a significant increase in credit risk has occurred since initial recognition, but which are not
credit-impaired
\u2022 Stage 3 applies to credit-impaired financial instruments.
When financial assets are under Stage 1, 12-month ECLs are recognised. When financial assets are under Stage 2 or 3, lifetime ECLs are
recognised. An instrument moves down (or up) the stages when a significant increase in credit risk (SICR) has happened (or has reversed).
When determining whether the credit risk of a financial instrument has increased significantly since initial recognition, the Group considers
reasonable and supportable information, both qualitative and quantitative, that is relevant and is available without undue cost or effort,
including forward-looking information at its disposal. Key indicators used in order to determine whether a SICR has occurred (either in
isolation or in combination) are:
\u2022 deterioration in rating grade between origination date and reporting date. The level of deterioration required by an individual asset is
determined using a relative rating matrix
\u2022 exposure is identified on the investment managers\u2019 \u2018watchlist\u2019
\u2022 exposure is identified on internal \u2018credit watchlists\u2019
\u2022 a manual shift of an exposure to Stage 2 on an exceptional basis (where required, using management judgement).
The provisions of IFRS 9 include a rebuttable presumption that the credit risk on a financial asset has increased significantly since initial
recognition when contractual payments are more than 30 days past due, which is taken into account for this assessment.
The Group makes use of a practical expedient available in IFRS 9 whereby it can be assumed that the credit risk on a financial instrument
has\u00a0not\u00a0increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date
(e.g.\u00a0investment grade as determined by the Group\u2019s asset managers). This allows recognition of 12-month ECLs as opposed to, potentially,
lifetime ECLs. This is deemed to be the case where assets that have been downgraded remain of good credit quality (i.e. investment grade
as\u00a0determined by the Group\u2019s asset managers) as at the reporting date, to the extent that, where relevant, the Group\u2019s internal credit risk
ratings are considered to be consistent with a globally understood definition of \u2018low credit risk\u2019.
The Group estimates ECLs on its financial investments at amortised cost and debt instruments at FVOCI which are not credit-impaired
by using the probability of default approach. Based on this method, the ECLs are a probability-weighted estimate of the present value of
estimated cash shortfalls, i.e. the weighted average of credit losses, with the respective risks of a default occurring used as the weightings.
For this purpose, the key elements to be calculated are the Probability of Default (PD), i.e. the estimate of the likelihood of default over a
given time horizon (either 12 months or lifetime); the respective Loss Given Default (LGD); and the Exposure at Default (EAD).
Exposures that move into Stage 3 are able to transition back to Stage 2 if the asset no longer meets the definition of default. Similarly,
exposures will re-transition from Stage 2 to Stage 1 where the SICR indicators no longer apply. No separate cure or probation periods are
applied on the basis that assets will not be re-rated or moved out of default until there is evidence of stable and improved performance.
In order to determine 12-month or lifetime PDs the Group\u2019s models utilise historical data obtained from S&P and Moody\u2019s in order to
evaluate transitions (i.e. the probability that a security changes rating in a given year) and defaults, plus scenario-specific annual scaling
factors which adjust the PDs for forward-looking information. The final PDs produced by the model are unconditional, i.e. they incorporate
both the probability of not defaulting until the start of the period and the subsequent probability of default in that period, conditional on the
position not having defaulted to that point. This allows them to be summed over 12 months to provide 12-month PD estimates, or over all
remaining months to produce lifetime PD estimates.
LGD is the magnitude of the likely loss if there is a default, based on the history of recovery rates of claims against defaulted counterparties
and taking into account collateral values where applicable.
EAD represents the expected exposure in the event of a default. The Group estimates LGD based on the history of recovery rates of claims
against defaulted counterparties. Appropriate haircuts are applied to baseline unsecured LGDs and used in conjunction with forecast
collateral values to estimate LGD for assets secured by collateral.
The Group has adopted a simplified approach for trade receivables, contract assets and finance and operating lease receivables. This allows
measurement of lifetime ECLs only, thereby removing the need to identify SICRs. For these balances, the Group makes use of provision
matrices in order to calculate such lifetime ECLs. This is a practical expedient allowed by IFRS 9 whereby historical credit loss experience
and fixed loss rates are applied to the balances outstanding. Historical loss rates are adjusted to allow for forward-looking information.
Hedge accounting
The Group uses hedge accounting, provided the prescribed criteria are met, to recognise the offsetting effects of changes in the fair value
or cash flow of the derivative instrument and the hedged item. Hedge accounting can be applied in order to:
\u2022 hedge the exposure to fair value movements of a recognised asset or liability or an unrecognised firm commitment, or a component
of any such item, that is attributable to a particular risk and could affect the Consolidated Income Statement
\u2022 hedge the exposure to variability in cash flows attributable to a particular risk associated with all, or a component of, a recognised asset
or liability, or a highly probable forecast transaction, that could affect the Consolidated Income Statement
\u2022 hedge the exposure to the currency risk associated with a net investment in a foreign operation.
The relationship between the hedging instrument and the hedged item, together with the risk management objective and strategy for
undertaking the hedge transaction, are documented formally at the inception of the transaction. The documentation includes identification of
the hedging instrument, the hedged item, the nature of the risk being hedged and how the Group will assess whether the hedging relationship
meets the hedge effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the hedge ratio is determined).
A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements:
\u2022 there is an economic relationship between the hedged item and the hedging instrument
\u2022 the effect of credit risk does not dominate the value changes that result from that economic relationship
\u2022 the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually
hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
The effective portion of the gain or loss on the hedging items is recognised in the Consolidated Statement of Comprehensive Income and
in a separate reserve within equity (cash flow hedge). The gain or loss relating to the ineffective portion is recognised immediately in the
Consolidated Income Statement. Amounts accumulated in equity are reclassified in the periods when the hedged item affects profit or loss.
The change in fair value of the hedging instrument related to the basis spread or forward points movements is recognised in a separate
component of equity (cost of hedging reserve) to the extent that it relates to the hedged item (cost of hedging reserve) and expensed on
a systematic and rational basis over the period of the hedge relationship.
Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date.
Fair value measurements are based on observable and unobservable inputs. Observable inputs reflect market data obtained from
independent sources, while unobservable inputs reflect the Group\u2019s view of market assumptions in the absence of observable market
information. The Group utilises techniques that maximise the use of observable inputs and minimise the use of unobservable inputs.
The best evidence of the fair value of a financial instrument at initial recognition is normally the transaction price. In certain circumstances,
the fair value at initial recognition differs from the transaction price. If the fair value is evidenced by comparison by a quoted price in an active
market for an identical instrument, or is based on a valuation technique that uses only data from observable markets, the difference between
the fair value at initial recognition and the transaction price is recognised as a gain or loss in the Consolidated Income Statement. In all other
cases, the difference between the fair value at initial recognition and the transaction price is deferred and recognised in the Consolidated
Income Statement over the life of the instrument to the extent that it arises from a change in a factor (including time) that market participants
would take into account when pricing the instrument.
Revenue
Insurance revenue
The Group\u2019s insurance revenue depicts the provision of services arising from a group of insurance contracts, reflecting the consideration
the Group expects to be entitled to in exchange for those services. Insurance revenue from a group of insurance contracts is therefore the
relevant portion for the period of the total consideration for the contracts, (i.e. the amount of premiums paid to the Group adjusted for
financing effect (the\u00a0time value of money) and excluding any investment components).
The total consideration for a group of contracts covers amounts related to the provision of services and comprises:
\u2022 the release of the CSM
\u2022 changes in the risk adjustment for non-financial risk relating to current service
\u2022 claims and other insurance service expenses expected at the beginning of the period
\u2022 experience adjustments arising from premiums received in the period other than those that relate to future service
\u2022 insurance acquisition cost recovery determined by allocating the portion of premiums related to the recovery of those costs on the basis
of\u00a0insurance coverage provided
\u2022 other amounts, including any other pre-recognition cash flow assets derecognised at the date of initial recognition.
Fees from fund management and investment contracts
The Group generates revenue from acting as the investment manager for clients. Fees charged on investment management services are
based on the contractual fee arrangements applied to assets under management and recognised as revenue as the services are provided.
The Group\u2019s income from investment contracts is primarily derived from fees for administration and managing of funds in pension plans.
Revenue generated on investment contracts is recognised as services are provided. No significant judgements are applied on the timing or
transaction price. In the instances of performance fees where revenue is subject to meeting a certain performance threshold, such revenue is
not recognised until the condition has been met and it is highly probable that no significant reversal of amounts would occur. Variable costs
directly related to\u00a0securing new contracts are capitalised and amortised over the estimated period over which the revenue is earned.
Transaction fees are charged to implement trades for clients. Such fees are charged at the time the transaction takes place and are based
on\u00a0the\u00a0size of the underlying contract.
Other operational income from contracts with customers
House building
House building revenue arises from the sale of residential properties and land and is recognised net of discounts and sales incentives.
It also includes sale proceeds of part exchange properties. Sales of private houses are recognised on legal completion. Sales of social
housing, where multiple units are developed and sold under a contractual agreement with a single customer, typically a housing association,
are recognised over time in accordance with construction progress. Sales of land and commercial property are recognised on unconditional
exchange, namely when contracts are exchanged or missives concluded and, where appropriate, construction is complete. The transaction
price is determined using extensive research and expert judgement, current market values and regional variations.
Warranties are provided on all properties and range from 2-10 years. Due to their features, these do not represent separate performance obligations.
Professional services fees
The Group\u2019s professional services fees revenue arises from professional services provided by employed surveyors and third-party providers,
panel\u00a0management fees and administration fees. These fees are based on fee scales or contracts. Revenue is recognised when the service
has\u00a0been rendered.
In addition, the Group derives professional fees from facilitation of mortgage arrangements and related products such as conveyancing. These are
based on an agreement/contract and could be tiered based on volume. The obligation in such instances is satisfied on completion of the mortgage/
service, at which point the revenue is recognised. There is no significant judgement applied on the timing or amount of fee recognised.
Insurance broker fees
Fees are charged on each performance obligation offered to the customer as per agreed structure. Revenue for placement services is
recognised at the point in time when the intermediary has satisfied its performance obligation, that is when the terms of the insurance
policy have been agreed contractually by the insurer and policyholder and the insurer has a present right to payment from the policyholder.
No significant judgements are applied on the timing or transaction price.
Investment return
Investment return includes unrealised fair value gains and losses on financial investments at fair value through profit or loss, realised gains
and\u00a0losses, dividends, rent and interest. Dividends are accrued on an ex-dividend basis. Interest income is recognised as it accrues, taking into
account the effective yield on the investment. Rental income is recognised on an accruals basis and is generally recognised on a straight line
basis unless there is compelling evidence that benefits do not accrue evenly over the period of the lease. Interest income for financial assets
which are not classified as fair value through profit or loss (FVTPL) is recognised using the effective interest method.
A gain or loss on a financial investment is only realised on disposal or transfer and is the difference between the proceeds received, net
of transactions cost and its original cost or amortised cost, as appropriate. Realised gains or losses on investment property represent the
difference between the net disposal proceeds and the carrying value of the property.
Unrealised gains and losses represent the difference between the carrying value at the end of the year and the carrying value at the previous
year end or purchase value during the year, less the reversal of previously unrealised gains and losses in respect of disposals made during
the year.
Insurance service expenses
Insurance service expenses arising from insurance contracts are recognised in profit or loss as they are incurred. They exclude repayments
of investment components and comprise the following items:
\u2022 incurred claims and benefits, excluding investment components reduced by loss component allocations
\u2022 incurred directly attributable expenses
\u2022 insurance acquisition cost amortisation
\u2022 insurance acquisition cost asset impairment.
Dividends
Interim dividends on ordinary shares are deducted from retained earnings in the period in which they are paid. Final dividends on ordinary
shares are recognised as a liability in the period in which they have been approved by shareholders of the Company.
Earnings per share
Earnings per share is a measure of the portion of the Group\u2019s profit allocated to each outstanding share. It is calculated by dividing net
income attributable to ordinary equity holders by the weighted average number of ordinary shares in issue during the year, excluding
employee scheme treasury shares. For this purpose, net income is defined as the profit after tax, attributable to equity holders of the
Company, derived from continuing operations.
For diluted earnings per share, the weighted average number of ordinary shares in issue, excluding employee scheme treasury shares, is
adjusted to assume conversion of all dilutive potential ordinary shares, such as share options granted to employees. Potential or contingent
share issuances are treated as dilutive when their conversion to shares would decrease net earnings per share.
Intangible assets
Intangible assets mainly consist of capitalised software costs.
Where software costs are separately identifiable and measurable, they are capitalised at cost and amortised over their expected useful life
on a straight-line basis. Costs incurred to internally develop software are only capitalised if the expenditure can be measured reliably, the
product or process is technically and commercially feasible, future economic benefits are probable and the Group intends to and has
sufficient resources to\u00a0complete such development and to use or sell the asset. Otherwise, such costs are recognised in profit or loss as
incurred. The estimated amortisation period for IT development costs and software is between 3 and 10 years.
Intangible assets acquired via business combinations are recognised at fair value and are subsequently amortised on a straight-line basis
over their estimated useful life.
Amortisation methods, useful lives and any expected residual values are reviewed at each reporting date and adjusted if appropriate.
Intangible assets are tested for impairment either individually or at the cash-generating unit level. Intangible assets with indefinite useful
lives and intangible assets not yet available for use are tested for impairment at least annually, or whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. Intangible assets with finite useful lives are tested when there are indications
of impairment. The recoverable amount is the higher of an asset\u2019s fair value less costs to sell and its value in use.
Investment property
Investment property comprises land and buildings which are held for long-term rental yields and capital growth, as well as right-of-use
assets of the same nature and are not occupied by the Group. Completed investment property is carried at fair value with changes in fair
value recognised in the Consolidated Income Statement within Investment return. Investment properties under construction are included
within Property, plant and equipment and are stated at cost less any impairment until construction is completed or fair value becomes
reliably measurable.
Non-current assets held for sale
Assets and liabilities part of a disposal group classified as held for sale are shown separately in the Consolidated Balance Sheet. They are
recorded at the lower of their carrying amount and their fair value less costs to sell.
Discontinued operations
Discontinued operations comprise those activities that were disposed of or classified as held for sale at the end of the period and represent
a separate major line of business or geographical area that can clearly be distinguished for operational and financial reporting purposes.
The results of discontinued operations are presented separately in the Consolidated Income Statement and Consolidated Statement of
Comprehensive Income. Comparatives are re-presented where applicable.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, treasury bills and other short-term highly liquid
investments with maturities of three months or less from the date of acquisition.
Property, plant and equipment
Property, plant and equipment includes tangible assets owned by the Group (such as land and office and other buildings) or held under lease
arrangements (such as office buildings, IT equipment and vehicles). Property, plant and equipment includes owner occupied property held by a
fund, the units of which determine benefits for its investors. In accordance with IAS 16, \u2018Property, Plant and Equipment\u2019, the Group has elected
to measure this asset at fair value, with changes in fair value recognised in the Consolidated Income Statement within Investment return.
All other assets within Property, plant and equipment are carried at historical cost less accumulated depreciation, calculated on a straight-
line basis over their estimated useful life. Amortisation methods, useful lives and any expected residual values are reviewed at each
reporting date and\u00a0adjusted if appropriate.
An impairment review of Property, plant and equipment not carried at fair value is performed whenever events or changes in circumstances
indicate that their carrying amount may not be recoverable. Where the carrying amount of an asset is greater than its estimated recoverable
amount, which is the higher of the assets fair value less costs of disposal and value in use, it is written down immediately to its recoverable
amount, with an impairment loss recognised in the Consolidated Income Statement.
Leases
Lessee
Where the Group is a lessee, it recognises leases on the Consolidated Balance Sheet as \u2018right-of-use\u2019 assets and lease liabilities.
The right-of-use assets\u2019 value is initially recognised as the calculated value of the lease liabilities, initial direct costs and incentives received.
The right-of-use assets are subsequently accounted for in accordance with the cost model in IAS 16, \u2018Property, Plant and Equipment\u2019 or as
investment property under IAS 40, \u2018Investment Property\u2019. The Group also assesses right-of-use assets classified as Property, plant and
equipment for impairment when such indicators exist.
The initial measurement of the lease liabilities is made up of the present value of lease payments to be made over the lease term, including
fixed lease payments and excluding lease incentive receivables. The Group uses the incremental borrowing rate as a discount rate for
calculating the lease liabilities. The lease liabilities are unwound over the term of the lease giving rise to an interest expense. Additionally,
the liabilities are reduced when lease payments are made. The Group reassesses the carrying amount of lease liabilities and right-of-use
assets if certain events occur that modify the original assumptions used to calculate the lease balances upon initial recognition.
The Group leases offices, vehicles, IT equipment and investment properties under non-cancellable operating lease agreements. The
Group has elected to make use of the recognition exemptions as permitted in respect of short-term leases (lease contracts with a term
of 12 months or less) and lease contracts for which the underlying asset is of low value. Such leases are not recognised on the Consolidated
Balance Sheet but the Group recognises the associated lease payments as an expense over the lease term.
Lessor
Where the Group is the lessor, leases are classified as finance leases if the risks and rewards of ownership are substantially transferred to
the lessee and operating leases if they are not substantially transferred.
The Group leases certain investment properties to third parties. Under these agreements, substantially all the risks and rewards incidental to
ownership are transferred to the lessee and therefore the contracts have been classified as finance leases. At the lease commencement date,
the\u00a0Group derecognises the investment property asset and recognises a receivable asset on its Consolidated Balance Sheet to reflect the net
investment in the\u00a0lease, equal to the present value of the lease payments. The Group recognises finance income over the lease term to reflect
the rate of return on\u00a0the net investment in the lease.
Under other lease agreements the Group is considered to substantially retain all the risks and rewards of ownership of the underlying asset,
therefore these contracts have been classified as operating leases. Lease income from operating leases is recognised in the Consolidated
Income Statement on\u00a0a straight-line basis over the lease term.
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow
of\u00a0resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can
be\u00a0made. Where the Group expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised
as\u00a0a\u00a0separate asset but only when the reimbursement is virtually certain. The Group recognises a provision for onerous contracts when the
expected benefits to be derived from a contract are less than the unavoidable costs of meeting the obligations under the contract.
Tax
Current tax
Current tax comprises tax payable on current year profits, adjusted for non-tax deductible or non-taxable items and any adjustments to tax
payable in respect of previous periods. Current tax is recognised in the Consolidated Income Statement unless it relates to items which are
recognised in the Consolidated Statement of Comprehensive Income or directly in equity.
Deferred tax
Deferred tax is calculated on differences between the accounting value of assets and liabilities and their respective tax values. Deferred tax
is also recognised in respect of unused tax losses to the extent it is probable that future taxable profits will arise against which the losses
can be utilised. Deferred tax is charged or credited to the Consolidated Income Statement, except when it relates to items charged or
credited to the Consolidated Statement of Comprehensive Income or charged or credited directly in equity.
Tax attributable to policyholders and equity holders
The total tax expense shown in the Group\u2019s Consolidated Income Statement includes income tax borne by both policyholders and equity
holders. This has been split between tax attributable to policyholders\u2019 returns and equity holders\u2019 profits. Policyholder tax comprises the
tax suffered on policyholder investment returns, while equity holder tax is corporation tax charged on equity holder profit. The separate
presentation is intended to provide more relevant information about the tax that the Group pays on the profits that it makes.
Use of estimates
Tax balances include the use of estimates and assumptions which affect items reported in the Consolidated Balance Sheet, Consolidated
Income Statement and Consolidated Statement of Comprehensive Income. Although these estimates are based on management\u2019s best
knowledge of current circumstances and future events and actions, actual results may differ from those estimates.
For tax this includes the determination of assets and liabilities recognised in respect of uncertain tax positions and the estimation of future
taxable income supporting deferred tax asset recognition.
As the Group operates internationally, it is exposed to uncertain tax positions and changes in legislation in the jurisdictions in which it
operates. The assessment of uncertain tax positions is subjective and significant management judgement is required. This judgement is
based on interpretation of legislation, management experience and professional advice. The directors have assessed the Group\u2019s uncertain
tax positions and are comfortable that the provisions in place are not material individually or in aggregate and that a reasonable possible
alternative outcome in the\u00a0next financial year would not have a material impact to the results of the Group.
Foreign exchange and exchange rates
Foreign currency transactions are translated into the functional currency using the exchange rate prevailing at the date of the transactions.
The\u00a0functional currency of the Group\u2019s foreign operations is the currency of the primary economic environment in which the entity operates.
The\u00a0assets and liabilities of all of the Group\u2019s foreign operations are translated into sterling, the Group\u2019s presentation currency, at the closing
rate\u00a0at\u00a0the date of the Consolidated Balance Sheet. Income and expenses are translated at average exchange rates. On consolidation,
exchange differences arising from the translation of the net investment in foreign entities and of borrowings and other currency instruments
designated as\u00a0hedges of such investments, are taken to a separate component of shareholders\u2019 equity.
Foreign exchange gains and losses are recognised in the Consolidated Income Statement, except when recognised in equity as qualifying
cash flow or net investment hedges.
Share-based payments
The Group accounts for options and awards under equity compensation plans, until such time as they are fully vested, using the fair value
based\u00a0method of accounting. The fair value at the date of grant of the equity instrument is recognised as an expense, spread over the vesting
period of the instrument. The total amount to be expensed is determined by reference to the fair value of the awards, excluding the impact of
any\u00a0non-market vesting conditions. At each balance sheet date, the Group revises its estimate of the number of equity instruments which are
expected to become exercisable. It recognises the impact of the revision of original estimates, if any, in the Consolidated Income Statement
and a\u00a0corresponding adjustment is made to equity. On vesting or exercise, the difference between the expense charged to the Consolidated
Income Statement and the actual cost to the Group is\u00a0transferred to Retained earnings. Where new shares are issued, the proceeds received
are credited to Share capital and Share premium.
Share capital, share premium and employee scheme treasury shares
An equity instrument is any contract which evidences a residual interest in the net assets of an entity. It follows that a financial instrument
is\u00a0treated as equity if:
\u2022 there is no contractual obligation to deliver cash or other financial assets or to exchange financial assets or liabilities on unfavourable
terms
\u2022 the instrument is either a non-derivative which contains no contractual obligation to deliver a variable number of own equity instruments,
or\u00a0is\u00a0a\u00a0derivative which will be settled only by the Group exchanging a fixed amount of cash, or other financial assets, for a fixed number
of\u00a0its\u00a0own equity instruments.
Where any Group entity purchases the Company\u2019s equity share capital, the consideration paid, including any directly attributable
incremental costs\u00a0(net of income taxes), is deducted from equity attributable to shareholders. Where such shares are subsequently
sold, reissued or otherwise\u00a0disposed of, any consideration received is included in equity attributable to shareholders, net of any directly
attributable incremental transaction costs and the related income tax effects. Shares held on behalf of employee share schemes are
disclosed as such on the Consolidated Balance Sheet.
Fiduciary activities
Assets associated with fiduciary activities and the income arising from those assets, together with associated commitments to return such
assets to customers, are not included in these financial statements. Where the Group acts in a fiduciary capacity, for instance as a trustee
or\u00a0agent, it has no contractual rights over the assets concerned.
(ix) Foreign exchange and exchange rates
The principal foreign exchange rates used for translation are:
Year end exchange rates
2025
2024
US Dollar
1.35
1.25
Euro
1.15
1.21
Average exchange rates
2025
2024
US Dollar
1.32
1.28
Euro
1.17
1.18
", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesAccountingEstimatesAndErrorsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-570": { "value": "
1. Basis of preparation and accounting policies
Legal & General Group Plc, a public limited company incorporated and domiciled in England and Wales, operates across three broad
business areas of institutional retirement, asset management and retail (insurance and retirement), through its subsidiaries and associates
in\u00a0the United Kingdom (UK), the United States, Bermuda and other countries throughout the world.
(i) Basis of preparation
The Group financial statements, which comprise the information on pages 131 to 234, except the information disclosed as being unaudited,
have been prepared in accordance with UK-adopted international accounting standards, comprising International Accounting Standards
and\u00a0IFRS as issued by the International Accounting Standards Board (IASB) and related interpretations issued by the IFRS Interpretations
Committee. Endorsement is granted by the UK Endorsement Board (UKEB). The Group financial statements have been prepared under the
historical cost convention, as modified by the revaluation of investment property, financial assets at fair value through other comprehensive
income and certain assets and financial liabilities (including derivative instruments) at\u00a0fair value through profit or loss.
The Group has selected accounting policies which state fairly its financial position, financial performance and cash flows for a reporting
period. The accounting policies have been consistently applied to all years presented unless otherwise stated.
Financial assets and financial liabilities are disclosed gross in the Consolidated Balance Sheet unless a legally enforceable right of offset
exists and there is an intention to settle recognised amounts on a net basis. Income and expenses are not offset in the Consolidated Income
Statement unless required or permitted by any accounting standard or International Financial Reporting Interpretations Committee (IFRIC)
interpretation, as detailed in the applicable accounting policies of the Group.
(ii) Going concern
The Group\u2019s business activities, together with the factors likely to affect its future development, performance and position in the current
economic environment are set out in this Annual report and accounts. The financial position of the Group, its cash flows, liquidity position and
borrowing facilities are described in these consolidated financial statements. Principal risks and uncertainties are detailed on pages 42 to 46
The directors have made an assessment of the Group\u2019s going concern, considering both the current performance and the outlook for a period
of at least, but not limited to, 12 months from the date of approval of these consolidated financial statements, using the information available
up to the date of issue of this Annual report and accounts.
The Group manages and monitors its capital and liquidity and applies various stresses, including adverse inflation and interest rate scenarios,
to those positions to understand potential impacts from market downturns. Our key sensitivities and the impacts on our capital position from
a range of\u00a0stresses are disclosed in Note 28 Management of capital resources (this note is unaudited). These stresses do not give rise to any
material uncertainties over the ability of\u00a0the Group to continue as a going concern. Based upon the available information, the directors consider that
the Group has the plans and resources to manage its business risks successfully and that it remains financially strong and well diversified.
Having reassessed the principal risks and uncertainties (both financial and operational) in light of the current economic environment, as detailed
on pages 42 to 46, the directors are confident that the Group and Company will have sufficient funds to continue to meet its liabilities as they
fall due for a period of, but not limited to, 12 months from the date of approval of the financial statements and therefore have considered it
appropriate to adopt the going concern basis of accounting when preparing the financial statements.
(iii) Impact of the sale of the Group's US insurance entity on financial reporting
On 7 February 2025 the Group announced that it had agreed to sell its US insurance entity, comprising its US protection and US pension
risk transfer (PRT) businesses, through the disposal of its entire shareholding in Legal & General America Inc., the parent company of Banner
Life and William Penn, to Meiji Yasuda Life Insurance Company (Meiji Yasuda), a Japanese mutual life insurer, for $2.3bn. The transaction
completed on 2\u00a0February 2026 for proceeds of $2.6bn (which reflects net asset transfers and the impact of business performance since
1 January 2025).
Following completion, Meiji Yasuda became the owner of the Group's US protection business and now holds a 20% economic interest in
its US PRT business. The Group has retained 80% of existing and new PRT business through a new reinsurance agreement with Meiji
Yasuda.
The transaction has had the following impacts on financial reporting:
\u2022 In accordance with IFRS 5, 'Non-current Assets Held for Sale and Discontinued Operations' the Group's US insurance entity qualifies for
classification and measurement as a held for sale disposal group. This includes the entirety of the US protection and US PRT businesses.
\u2022 The disposal group also meets the definition of discontinued operations. As a consequence, the results of the disposal group for the year
ended 31 December 2025 have been presented in separate lines within the Group Consolidated Income Statement and Consolidated
Statement of Comprehensive Income. Comparative information has been re-presented accordingly in line with IFRS 5 requirements.
\u2022 The composition of the Group's reportable segments in accordance with IFRS 8 'Operating Segments', has changed. In preparation for the
completion of the disposal, the results related to the Group's US protection business and 20% of those related to the US PRT business have
now been reported to key decision makers separately. As a consequence, they are no longer included in the results of the Insurance and
Institutional Retirement segments and are now presented separately as \"Non-retained US business\". Exposure to the remaining 80% of the
US PRT business will be retained by way of the new reinsurance agreement and therefore these results continue to be reported within
Institutional Retirement. Segmental information in relation to the prior year has been re-presented where applicable to reflect these changes.
\u2022 The calculation of core operating profit and core operating earnings per share (core operating EPS), two of the Group\u2019s Alternative
Performance Measures (APMs), has been updated. Non-retained US business is no longer considered to be key to achieving the Group\u2019s
strategy and therefore, in line with the definition of core operating profit and core operating EPS, its results are now excluded from their
calculation. Prior year comparatives have been restated accordingly. As a result of the change, core operating profit for the year ended
31 December 2024 has decreased by \u00a382m (from \u00a31,616m to \u00a31,534m). Core operating EPS for the year ended 31 December 2024
has decreased by 1.03pps (from 20.23pps to 19.20pps).
(iv) New standards, interpretations and amendments to published standards that have been adopted by the Group
The Group has applied Amendments to IAS 21, \u2018The Effects of Changes in Foreign Exchange Rates\u2019: \u2018Lack of Exchangeability' for the first
time in the year commencing 1 January 2025, which did not have a material impact on its consolidated financial statements.
(v) Standards, interpretations and amendments to published standards which are not yet effective
Amendments to IFRS 9, \u2018Financial Instruments\u2019 and IFRS 7, \u2018Financial Instruments: Disclosures\u2019: \u2018Amendments to the Classification and
Measurement of Financial Instruments\u2019
These amendments, issued in May 2024, provide the following:
\u2022 clarification around the date of recognition and derecognition of some financial assets and liabilities, with a new exception for some
financial liabilities settled through an electronic cash transfer system
\u2022 clarification and guidance for assessing whether a financial asset meets the solely payments of principal and interest (SPPI) criterion
\u2022 new disclosure requirements for certain instruments with contractual terms that can change cash flows (such as some financial
instruments with features linked to the achievement of environment, social and governance targets)
\u2022 an update to the disclosures for equity instruments designated at fair value through other comprehensive income (FVOCI).
The amendments are effective for annual reporting periods beginning on or after 1 January 2026. These amendments are not expected
to give rise to a material impact on the Group\u2019s consolidated financial statements.
Annual improvements to IFRS Accounting Standards \u2013 Volume 11
The IASB issued its annual improvements in July 2024, which include a collection of minor amendments to accounting standards, applicable
for annual reporting periods beginning on or after 1 January 2026. These are not expected to give rise to a material impact
on the Group\u2019s consolidated financial statements.
IFRS 18, \u2018Presentation and Disclosure in Financial Statements\u2019
IFRS 18, issued in April 2024, will replace IAS 1, \u2018Presentation of Financial Statements\u2019. IFRS 18 introduces new requirements for
presentation within the income statement, including specified totals and subtotals, which aim at increasing comparability of the
financial performance of similar entities, as well as provide more relevant information and transparency to users.
The standard is effective for reporting periods beginning on or after 1 January 2027, with earlier application permitted. The Group is currently
assessing the impacts of the amendments on the consolidated and Company financial statements, in particular around the presentation of its
results within the Consolidated Income Statement and the definition and disclosure of management-defined performance measures.
IFRS 19, \u2018Subsidiaries without Public Accountability: Disclosures\u2019
IFRS 19, issued in May 2024, allows for certain eligible subsidiaries of parent entities that report under IFRS Accounting Standards to apply
reduced disclosure requirements. IFRS 19 is effective for reporting periods beginning on or after 1 January 2027, with early application
permitted, subject to UK endorsement. The Group is not eligible to apply IFRS 19.
(vi) Critical accounting judgements and the use of estimates
The preparation of the financial statements includes the use of estimates and assumptions which affect items reported in the Consolidated
Balance Sheet and Consolidated Income Statement and the disclosure of contingent assets and liabilities at the date of the financial
statements. Although these estimates are based on management\u2019s best knowledge of current circumstances and future events and actions,
material adjustments could be made to the carrying amounts of assets and liabilities within the next financial year. The Audit Committee
reviews the reasonableness of judgements associated with and the application of material accounting policies. The significant accounting
matters considered by the Audit Committee in respect of the year ended 31 December 2025 are included within the Audit Committee report
on page 69.
The major areas of critical accounting judgement on policy application are considered below:
Insurance and investment contract liabilities (Notes 22 and 23): Product classification and the assessment of the significance of\u00a0insurance
risk transferred to the Group in determining whether a contract should be accounted for as an insurance or\u00a0investment\u00a0contract
Contracts which transfer significant insurance risk to the Group are classified as insurance contracts. Contracts that transfer financial risk
(e.g.\u00a0change in interest rate or security price) to the Group but not significant insurance risk are classified as investment contracts.
Judgement is required in order to assess the significance of the transfer of insurance risk within a contract. This assessment is based
on whether the occurrence of an insured event could cause the Group to make significant additional payments, i.e. if the occurrence
of the event causes significantly higher cash out flows for the Group than its non-occurrence.
Certain contracts, which are both insurance and investment, can contain discretionary features representing the contractual right to receive
additional benefits as a supplement to guaranteed benefits under certain conditions, being:
\u2022 that the additional benefits are a significant portion of the total contractual benefits
\u2022 the timing and amount of the additional benefits is at the discretion of the Group
\u2022 that the additional benefits are contractually dependent upon the performance of an entity, fund or specified pool of assets.
Insurance contracts and investment contracts with such discretionary participation features are accounted for under IFRS 17, while
investment contracts without discretionary participation features are accounted for as financial instruments under IFRS 9.
Judgement is therefore required in order to establish whether any additional benefits in an insurance or investment contract meet the above
requirements for being considered discretionary participation features.
Consolidation (Notes 41-43): Assessment of whether the Group controls underlying entities and should therefore consolidate them.
The assessment takes account of various criteria, including decision-making ability, equity holding and the rights to a variable return from
the\u00a0entity.
Control arises when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect
those returns through its power over the entity.
For operating entities this generally accompanies a shareholding of 50% or more in the entity. Subsidiaries that are consolidated where the
Group owns less than 50% of the ordinary share capital (structured entities), are consolidated based on an assessment of control normally
arising from special rights attaching to the class of share owned, other contractual arrangements and factors such as the purpose of the
investee, the nature of its relevant activities, voting rights (including potential voting rights) and substantive and protective rights.
The Group invests in various fund and unit trust entities where it also acts as the asset manager to those entities. In these instances, in
determining whether the Group controls the entities, the assessment focuses on the aggregate economic interests of the Group (direct
interest and expected management fees) and on whether the Group acts as a principal or agent. This includes an assessment of the removal
rights of other investors (their practical ability to allow the Group not to control the fund). Additionally, holdings in such investments can
fluctuate on a daily basis according to\u00a0the participation of the Group and other investors in them. As a result, in determining control, we look
at an assessment of these factors over a\u00a0longer period to mitigate the impact of daily fluctuations which do not reflect the wider facts and
circumstances of the Group\u2019s involvement. This\u00a0is performed in line with the following principles:
\u2022 where the entity is managed by a Group asset manager and the Group\u2019s ownership holding in the entity exceeds 50%, the Group is judged
to\u00a0have control over the entity
\u2022 where the entity is managed by a Group asset manager and the Group\u2019s ownership holding in the entity is between 30% and 50%, the
facts and\u00a0circumstances of the Group\u2019s involvement in the entity are considered, including the rights to any fees earned by the asset
manager from\u00a0the entity, in forming a judgement as to whether the Group has control over the entity
\u2022 where the entity is managed by a Group asset manager and the Group\u2019s ownership holding in the entity is less than 30%, the Group is
judged to\u00a0not have control over the entity, but again the facts and circumstances of the Group\u2019s involvement in the entity are considered.
The following sets out information about the critical accounting assumptions made by the Group about the future and other major sources
of\u00a0estimation uncertainty at the end of the reporting period, that have a significant risk of resulting in a material adjustment to the carrying
amounts of assets and liabilities within the next financial year:
Valuation of insurance contract liabilities (Notes 20-22)
The key judgements around the valuation of insurance contract liabilities relate to the following assumptions:
\u2022 determination of the longevity, mortality and morbidity assumptions used in the calculation of the insurance contract liabilities; the
assumptions for the rate of future longevity, mortality and morbidity are based on the Group\u2019s internal experience and judgements
about how experience may vary in the future. This assessment takes into account market benchmarking, internal experience studies
and independent industry data. The long-term assumptions are adjusted to reflect the Group\u2019s view on the effects of the Covid-19
pandemic on claims experience in the medium to long-term, informed by emerging experience and industry studies
\u2022 determination of the directly attributable expense assumptions used in the calculation of the insurance liabilities. These represent the
expected future costs that relate directly to the fulfilment of the underlying insurance policies and are based on management\u2019s best
estimate of these future costs and on an appropriate allocation between servicing new and existing business
\u2022 determination of valuation interest rates used to discount the liabilities, which are sensitive to the assumptions made, for example, on
credit default of the backing assets. These assumptions take into account consideration of market experience and historic internal data.
The valuation interest rate is also sensitive to the selection of the reference portfolio of assets chosen to back the liabilities
\u2022 determination of the compensation required for bearing the uncertainty about the amount and timing of the cash flows arising from
non-financial risks as insurance contracts are fulfilled, in the calculation of the risk adjustment
\u2022 determination of the weighting of the coverage units, used to calculate the CSM amortisation in the year, between the payment phase
and\u00a0the\u00a0deferral phase for deferred annuities. Judgement is required to combine the different coverage units so that they fairly reflect
the\u00a0services\u00a0provided
\u2022 determination of the transition date CSM under IFRS 17 incorporated judgement. In particular, judgements made in the calculation of the
CSM\u00a0for portfolios transitioned using the fair value approach at 1 January 2022 continue to be a component of the current valuation of
the\u00a0CSM\u00a0until those portfolios expire.
Note 21 includes a sensitivity analysis on post-tax Group profit and Group equity to reasonable alternative assumptions.
Valuation of unquoted illiquid assets and investment property (Note 13)
Determination of fair value of unquoted and illiquid assets and investment property involves judgements in model valuations, through the
incorporation of both observable and unobservable market inputs, which include assumptions that lead to the existence of a range of
plausible valuations for financial assets.
In assessing asset valuation, in line with applicable standards and guidance, the Group has both projected the short-term impact on earnings
and\u00a0cash flows of the current market volatility, while continuing to review the assets\u2019 ability to deliver longer term returns aligned to their
investment cases.
Note 21 includes a sensitivity analysis on the fair value of unquoted illiquid assets and investment property to reasonable alternative assumptions.
(vii) Consideration of climate change
The Group recognises emerging risks from both climate change and nature loss and the interrelationship between our climate and the
natural world. Climate change is the Group\u2019s most material sustainability issue, but the Group continues to develop its understanding
of its impacts and dependencies on nature, concurrently with its consideration of the impacts from climate change.
The Group is exposed to climate change through two broad categories: transition risks from the move to a low-carbon economy and the
impact this has on asset valuation and the economy; and physical risks from the impact on asset holdings as a result of severe weather
events and longer-term shifts in climate.
The Group has integrated climate risk management into its governance framework and has carried out a detailed assessment of how we
could expect climate risk to emerge across our business model. The Group risk mitigation strategy includes setting portfolio carbon intensity
targets, integrating carbon controls into the investment processes through stock exclusions and high carbon escalation, corporate engagement
and implementing high energy efficiency standards into the Group\u2019s directly owned commercial property and housing businesses.
The Group is committed to net zero, promoting a 1.5\u00b0C \u2018Paris-aligned transition\u2019. In order to meet its environmental goals, the Group has set
for itself a\u00a0number of targets and commitments, clearly linked with its business strategy and risk management controls. These are based on
the three key areas of our Group-wide activity, as an asset owner, an asset manager and in our own operations. Metrics and targets have
been defined around the Group\u2019s operational carbon footprint, investment portfolio economic carbon intensity and implied portfolio temperature
alignment. These are being targeted through the decarbonisation of the Group\u2019s balance sheet, investing in the transition, development of
climate friendly investment products and focus on own operations. The Group also continues to drive greater action as an asset manager to
address financially material climate and nature risks in the real economy consistent with our fiduciary duty.
Scenario analysis is performed to help understand the strategic implications of possible climate pathways, including the key features of a
transition to a net zero economy. Plausible scenarios have been developed based on estimations of how the energy system may evolve over
the next 30 years, using the most recent carbon budgets from the Intergovernmental Panel on Climate Change\u2019s Sixth Assessment Report
(AR6) and incorporated latest data on technology costs. These include two different pathways to \u2018below 2\u00b0C\u2019 and a scenario assuming
achievement of net zero. Given the Group\u2019s long-term climate risk relates to transition risk, a fourth scenario assuming global failure to act
on climate change and emissions growth at historical rates has been modelled, but the impacts have not been applied to our portfolio. Such
impacts are driven by physical risks which tend to be highly localised and manifest further into the future and are therefore more uncertain.
However, more broadly on physical risks, our modelling capabilities allow us to assess how acute events, such as floods and storms in the
High emissions scenario, may affect asset values, operations, and long-term resilience, as considered in our investment due diligence and
valuation uncertainty analysis.
In preparing the consolidated financial statements, the Group has considered the impact of climate change and in particular the transition
to a lower carbon economy, on the valuation of the Group\u2019s assets and liabilities. In the Strategic report, with additional information in the
Group\u2019s Climate and nature report, we have set out in detail the various risks and opportunities that are created by this transition and how
they may impact the Group across various time horizons. In line with the recommendations of the Task Force on Climate-related Financial
Disclosures, we have further described the resilience of the Group\u2019s strategy, taking into consideration different climate-related scenarios, as
described above. There is no one single scenario that underpins the financial statements. The scenarios help challenge the Group\u2019s perspectives
on the future business and economic environment as a result of the transition to a lower carbon economy, including consideration of events
that may be only remotely possible. As a result, the scenarios covered are not intended to be predictions of likely future events or outcomes
and are not the basis on which the Group\u2019s consolidated financial statements have been prepared.
At the current time, the Group does not consider climate risk to represent a significant area of judgement or of estimation uncertainty.
As at 31 December 2025, no material impacts on the Group\u2019s financial position, nor on the valuation of assets or liabilities on the Group\u2019s
Consolidated Balance Sheet as a result of climate change risk have been identified. In arriving at this determination, the Group has in
particular taken into account the following areas of judgement, which we consider to be those most exposed to the potential impact of
climate change in the preparation of the financial statements:
Going concern and viability
In preparing the consolidated financial statements, the directors are required to assess the Group\u2019s ability to continue as a going concern, by
taking into account all available information related to at least 12 months from the date of their approval. Additionally, the preparation of the
viability statement takes into consideration the Group\u2019s overall business model and strategy, forecast financial strength and resilience and
the liquidity profile over the planning horizon. Climate-related matters have been considered as part of these assessments and have not
been deemed to create material uncertainties as to their conclusions or to require specific disclosure.
Valuation of Level 3 financial investments and investment property
The valuation of unquoted illiquid assets and investment property has been separately identified as an area of significant estimation
uncertainty. The assumptions used in the models underpinning these assets\u2019 valuations, such as cash flows forecasts, discount rates
and multiples, are often unobservable. Due to the need to apply significant judgements, these assumptions can be impacted by transition
risk, with climate-related inputs gaining more traction (e.g. construction methods and materials, EPC ratings, ESG credentials and climate
resilience). This is particularly relevant for the Group\u2019s Private Markets portfolio, including alternative assets. Where possible, the Group\u2019s
assets are valued using standard market pricing sources or appropriately qualified external valuers and therefore reflect current market
sentiments around climate risk. In this respect market and investor expectations have also been evolving, with greater demand towards
net zero-aligned assets and away from traditional carbon-intensive methods, impacting expected investor returns and therefore discount
rates and multiples. Exposure to the risks of climate change is minimised through rigorous assessment of potential investments and active
monitoring of the carbon intensity of the current portfolio. Additionally, investment properties are being reviewed by independent third
parties, where applicable, with regards to potential retrofitting, to help reduce carbon emissions and make them more efficient and
sustainable for the future.
Asset impairment and residual economic life
The carrying value of goodwill, intangible and certain tangible assets on the Consolidated Balance Sheet which are subject to impairment
testing\u00a0could be affected by climate change risk. For example, inventory may become obsolete or restricted, causing selling prices to decline
or\u00a0their costs of completion to increase. If, as a result, the cost of inventories is not recoverable, they would need to be written down to their
net\u00a0realisable value.
Property, plant and equipment, right-of-use assets, goodwill and intangible assets may see their recoverable amount decrease in light of
climate change and significant changes in the environment (including for example changes in regulation) in which the Group operates, where
adverse effects can represent an indication of impairment. The estimation of recoverable amount as \u2018value in use\u2019 requires an assessment of
future expected cash flows based on assumptions potentially affected by climate-related matters, particularly for goodwill and intangible
assets, which\u00a0are subject to a higher degree of judgement. Where assets are subject to amortisation or depreciation, consideration needs
to be given to\u00a0whether climate risk suggests that the residual economic life is shorter than anticipated, which would give rise to increased
charges in the income statement. Due to the nature of the Group\u2019s assets, we do not anticipate any material additional impairments or
increased amortisation and\u00a0depreciation charges to arise from climate change. Risks will continue to be monitored against judgements
and estimates used in the assessment of impairment.
Insurance contract liabilities
The Group\u2019s insurance contracts are valued using discount rates derived from the backing asset portfolios with deductions made to remove
risks\u00a0that are present in the assets but are not relevant to the insurance liability. Climate-related risks could impact on the Group\u2019s exposure
to\u00a0future credit losses which would impact on the appropriate yield deductions in the discount rate calculation and therefore the insurance
contract valuations.
Provisions and contingent liabilities
The recognition, measurement and disclosure of provisions and contingent liabilities is subject to setting assumptions around future
events and the probability of their occurrence. Climate-related matters could affect these elements, for example by requiring recognition
or disclosure of a legal obligation (e.g. levies imposed for failing climate-related targets) or of a constructive obligation (e.g. requirements
to remediate environmental damage caused by the Group\u2019s operations and investment portfolios).
Deferred tax assets
Deferred tax assets are recognised for deductible temporary differences and unused tax losses and credits, to the extent it is probable
that future taxable profit will be available, against which those amounts can be utilised. Climate-related matters could affect the Group\u2019s
estimate of future taxable profits and therefore it may be required to derecognise deferred tax assets previously on the balance sheet.
Share-based payments
The Group\u2019s performance share plans provide a direct and transparent link between executive pay and the delivery of shareholder returns
over the longer term. They are a conditional award of shares subject to a performance period of at least three years. Performance metrics
for the Group\u2019s share plans are now clearly linked to ESG metrics.
Financial instruments
Expected credit losses are required to be recognised on receivables and certain financial investments, representing the counterparty\u2019s
probability\u00a0of default over a certain time horizon. Climate-related matters may affect the Group\u2019s exposure to these losses, for example
by\u00a0negatively affecting the borrower\u2019s ability to meet their obligations, or by affecting assumptions used in the models adopted to estimate
expected credit losses.
(viii) Material accounting policies
Consolidation principles
Subsidiary undertakings
The consolidated financial statements incorporate the assets, liabilities, equity, income, expenses and cash flows of the Company and of its
subsidiary undertakings drawn up to 31 December each year. All intra-group balances, transactions, income and expenses are eliminated in full.
Subsidiaries are those entities (including special purpose entities, mutual funds and unit trusts) over which the Group directly or indirectly
has control (i.e. when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to
affect those returns through its power over the investee) (Note 42).
Business combinations are accounted for by applying the acquisition method of accounting, which requires the Group to record the
identifiable assets and liabilities of the acquired business at fair value on the date of acquisition. The excess of the fair value of acquisition
consideration over\u00a0the recorded value of the assets and liabilities of the acquired entity is recorded on the statement of financial position
as goodwill. Profits or\u00a0losses of subsidiary undertakings sold or acquired during the year are included in the consolidated results up to the
date of disposal or from the\u00a0date of gaining control.
Puttable instruments held by external parties in consolidated investment vehicles, such as unit trusts, are classified as liabilities and appear
as\u00a0Net asset value attributable to unit holders\u2019 in the Consolidated Balance Sheet.
Associates and joint ventures
Associates are entities over which the Group has significant influence but which it does not control. It is presumed that the Group has
significant influence where it has between 20% and 50% of the voting rights in the investee unless indicated otherwise. Joint ventures
are entities where the Group and other parties have joint control over their activities.
The Group has interests in associates and joint ventures (Note 41) which form part of an investment portfolio held through private equity
vehicles, mutual funds, unit trusts and similar entities. In accordance with the choice permitted by IAS 28, \u2018Investments in Associates
and Joint Ventures\u2019, these interests have been classified as fair value through profit or loss and measured at fair value within financial
investments, with changes in fair\u00a0value recognised in the Consolidated Income Statement.
Associates and joint ventures which do not form part of an investment portfolio are initially recognised in the Consolidated Balance Sheet
at\u00a0cost. Goodwill arising on the acquisition of these associates or joint ventures is included within the carrying value of those investments.
Their carrying amount is increased or decreased to reflect the Group\u2019s share of total comprehensive income after the date of the acquisition.
Where the carrying amount of an associate or joint venture is greater than its estimated recoverable amount, which is the higher of the assets
fair value less costs of disposal and value in use, it is written down immediately to its recoverable amount, with an impairment loss
recognised in the Consolidated Income Statement.
Insurance contracts
Long term insurance contracts \u2013 initial measurement
Insurance contracts are contracts which transfer significant insurance risk to the insurer at the inception of the contract. This is the case if
and\u00a0only if, an insured event could cause an insurer to make significant additional payments in any scenario, other than a scenario which
lacks commercial substance. Such contracts remain insurance contracts until all rights and obligations are extinguished or expired.
At inception, the Group separates the following components from an insurance or reinsurance contract and accounts for them as if they
were stand-alone financial instruments:
\u2022 derivatives embedded in the contract whose economic characteristics and risks are not closely related to those of the host contract
and\u00a0whose\u00a0terms would not meet the definition of an insurance or reinsurance contract as a stand-alone instrument
\u2022 distinct investment components, i.e. investment components that are not highly inter-related with the insurance components and for
which contracts with equivalent terms are sold, or could be sold, separately in the same market or the same jurisdiction.
After separating any financial instrument components, the Group separates any promises to transfer to policyholders distinct goods or
services other than insurance coverage and investment services and accounts for them as separate contracts with customers (i.e. not as
insurance contracts).
A good or service is distinct if the policyholder can benefit from it either on its own or with other resources that are readily available to\u00a0
the policyholder. A good or service is not distinct and is accounted for together with the insurance component if the cash flows and risks
associated with the good or service are highly inter-related with the cash flows and risks associated with the insurance component and
the Group\u00a0provides a significant service of integrating the good or service with the insurance component.
Recognition and level of aggregation
An insurance contract is recognised at the earliest of the following:
(a) the beginning of the coverage period
(b) the date when the first payment from a policyholder becomes due
(c) for onerous contracts, when the contract becomes onerous.
The level of aggregation determines the unit of account at which IFRS 17 calculations are performed. This is determined firstly by dividing
the business written into portfolios. Portfolios comprise groups of contracts with similar risks which are managed together. Portfolios are
further divided based on expected profitability at inception into three categories: onerous contracts, contracts with no significant risk of
subsequently becoming onerous and the remainder. IFRS 17 also requires that no group for level of aggregation purposes may contain
contracts issued more than one year apart. The insurance contract disclosures have been aggregated at the level of the major product
lines of the business, annuities and protection. This disaggregation reflects their similar main characteristics and avoids the presentation
of insignificant detail.
All of the Group\u2019s in scope insurance contracts are accounted for under the general measurement model which measures a group of
insurance contracts as the total of:
\u2022 fulfilment cash flows
\u2022 CSM representing the unearned profit the Group will recognise as it provides services under the insurance\u00a0contract.
Fulfilment cash flows
Fulfilment cash flows comprise unbiased and probability-weighted estimates of future cash flows, discounted to present value to reflect the
time value of money and financial risks, plus a risk adjustment for non-financial risk. The Group\u2019s objective in estimating future cash flows is
to determine the expected value, or the probability weighted mean, of the full range of possible outcomes, considering all reasonable and
supportable information available at the reporting date without undue cost or effort. The Group estimates future cash flows considering a
range of scenarios which have commercial substance and give a good representation of possible outcomes. The cash flows from each
scenario are probability-weighted and discounted using current assumptions.
When estimating future cash flows, the Group includes all cash flows that are within the contract boundary. The cash flows include:
\u2022 premiums and related cash flows
\u2022 claims and benefits, including reported claims not yet paid, incurred claims not yet reported and expected future claims
\u2022 investment management costs incurred in the provision of an investment return service or to enhance the benefits of an insurance contract
\u2022 payments to policyholders resulting from embedded surrender value options
\u2022 an allocation of insurance acquisition cash flows attributable to the portfolio to which the contract belongs
\u2022 claims handling costs
\u2022 policy administration and maintenance costs, including recurring commissions that are expected to be paid to intermediaries for future services
\u2022 an allocation of fixed and variable overheads directly attributable to fulfilling insurance contracts
\u2022 transaction-based taxes.
The Group incorporates, in an unbiased way, all reasonable and supportable information available without undue cost or effort about the
amount, timing and uncertainty of those future cash flows. The Group estimates the probabilities and amounts of future payments under
existing contracts based on information obtained, including:
\u2022 information about claims already reported by policyholders
\u2022 other information about the known or estimated characteristics of the insurance contracts
\u2022 historical data about the Group\u2019s own experience, supplemented when necessary, with data from other sources (historical data is adjusted
to\u00a0reflect current conditions)
\u2022 current pricing information, when available.
The measurement of fulfilment cash flows includes insurance acquisition cash flows which are allocated as a portion of premium to profit
or loss (through insurance revenue) over the period of the contract.
Pre-recognition, insurance acquisition cash flow assets are recognised on the balance sheet prior to allocation to new insurance contracts
and are considered for impairment at each reporting date.
Risk adjustment
The risk adjustment for non-financial risk for a group of insurance contracts reflects the compensation that the Group would require for
bearing uncertainty about the amount and timing of the cash flows that arises from non-financial risk after diversification. The Group\u2019s risk
adjustment is calibrated using a Value at Risk (VAR) methodology. In some cases, the compensation for risk on reinsured business is linked
directly to the price paid for reinsurance.
Discounting
The insurance contract fulfilment cash flows are discounted at rates that reflect the characteristics of the insurance contract liabilities.
These\u00a0are\u00a0determined by starting from an appropriate asset portfolio with deductions to remove risks in the assets that are not present
in\u00a0the\u00a0insurance liabilities.
Contractual service margin (CSM)
The Group\u2019s CSM is a component of the asset or liability for the group of insurance contracts that represents the unearned profit the Group
will\u00a0recognise as it provides services in the future. The Group measures the CSM on initial recognition at an amount that, unless the group
of\u00a0contracts is onerous, results in no income or expenses arising from:
\u2022 initial recognition of the fulfilment cash flows
\u2022 any cash flows arising from the contracts in the Group at that date
\u2022 the derecognition at the date of initial recognition of:
\u2013 any asset for insurance acquisition cash flows
\u2013 any other asset or liability previously recognised related to the group of insurance contracts.
Onerous contracts
For groups of contracts assessed as onerous, the Group recognises a loss in profit or loss for the net outflow, resulting in the carrying amount
of\u00a0the liability for the Group being equal to the fulfilment cash flows and the CSM of the Group being zero. A loss component is established
by the\u00a0Group for the liability for remaining coverage for an onerous group, which represents the losses recognised.
Reinsurance contracts \u2013 initial measurement
The initial measurement of reinsurance contracts held follows the same principles as those for insurance contracts issued, with the exception
of\u00a0the following:
\u2022 reinsurance contracts are recognised from the earlier of the following:
\u2013 the beginning of the coverage period
\u2013 the date the entity recognises an onerous group of underlying insurance contracts, if the entity entered into the related reinsurance
contract\u00a0held in the group of reinsurance contracts held at or before that date.
\u2022 measurement of the cash flows includes an allowance on a probability-weighted basis for the effect of any non-performance by the
reinsurers, including the effects of collateral and losses from disputes
\u2022 the Group determines the risk adjustment for non-financial risk so that it represents the amount of risk being transferred to the reinsurer
\u2022 both day one gains and day one losses are not recognised at initial recognition in the statement of financial position but are deferred into
the\u00a0CSM and released to profit or loss as the reinsurer renders services, except for any portion of a day 1 loss that relates to events before
initial\u00a0recognition
\u2022 if the reinsurance contract is recognised prior to a loss-making underlying contract, the reinsurance CSM can be adjusted to offset a portion of
the inception loss (the loss recovery component). This offsets a portion of the loss recognised on inception of the underlying onerous contract.
Long term insurance contracts \u2013 subsequent measurement
The Group measures the carrying amount of a group of insurance contracts at the end of each reporting period as the sum of:
(i) the liability for remaining coverage comprising fulfilment cash flows related to future service allocated to the Group at that date and the
CSM of the Group at that date
(ii) the liability for incurred claims for the Group reflecting the fulfilment cash flows related to past service allocated to the Group at that date.
Contractual service margin \u2013 measurement
The CSM at the end of the reporting period represents the profit in the group of insurance contracts that has not yet been recognised
in profit or loss, because it relates to future service to be provided.
For a group of insurance contracts the carrying amount of the CSM of that group at the end of the reporting period equals the carrying
amount at\u00a0the beginning of the reporting period adjusted for:
\u2022 the effect of any new contracts added
\u2022 interest accreted on the carrying amount of the CSM during the reporting period, measured at the discount rates at initial recognition
\u2022 changes in fulfilment cash flows relating to future service, except to the extent that:
\u2013 such increases in the fulfilment cash flows exceed the current carrying amount of the CSM, giving rise to a loss; or
\u2013 such decreases in the fulfilment cash flows are allocated to the loss component of the liability for remaining coverage
\u2022 the amount recognised as insurance revenue because of the transfer of services in the period, determined by allocation of the CSM
at the end of the period over the current and remaining coverage period
\u2022 the effect of any currency exchange differences on the CSM.
The changes in fulfilment cash flows relating to future service that adjust the CSM comprise:
\u2022 experience adjustments that arise from the difference between the premium receipts (net of refunds) and any related cash flows such as
insurance acquisition cash flows and insurance premium taxes and the estimate, at the beginning of the period, of the amounts expected.
Differences related to premiums received (or due) in respect of current or past services are recognised immediately in profit or loss while
differences related to premiums received (or due) for future services are adjusted in the CSM
\u2022 changes in estimates of the present value of future cash flows in the liability for remaining coverage, except those relating to the time value
of\u00a0money and changes in financial risk (which are instead recognised in the statement of profit or loss and other comprehensive income)
\u2022 differences between any investment component expected to become payable in the period and the actual investment component that
becomes payable in the period
\u2022 changes in the risk adjustment for non-financial risk that relate to future service.
Adjustments to the CSM noted above are measured at discount rates that reflect the characteristics of the cash flows of the group of
insurance contracts at initial recognition (i.e. the weighted average of the rates applicable at the date of initial recognition of contracts
that joined a group over a 12-month period).
Onerous contracts
Groups of contracts that were not onerous at initial recognition can subsequently become onerous if assumptions and experience extinguish
the CSM. In this case, the Group establishes a loss component for the future losses recognised. The loss component is released based on
a systematic allocation of the subsequent changes in the fulfilment cash flows to: (i) the loss component; and (ii) the liability for remaining
coverage excluding the loss component. The loss component is also updated for subsequent changes in estimates of the fulfilment cash
flows related to future service. The systematic allocation of subsequent changes to the loss component results in the total amounts allocated
to the loss component being equal to zero by the end of the coverage period of a group of contracts (since the loss component will have
materialised in the form of incurred claims). The loss component ensures that over the duration of the contract, the correct amounts are
recognised as insurance revenue and insurance service expenses.
Contractual service margin (CSM) \u2013 recognition
The amount of CSM recognised in the income statement for a group of insurance contracts reflects the insurance contract services provided.
The proportion of the CSM earned is calculated as the amount of coverage units provided in the period divided by the sum of\u00a0all\u00a0the future and
current period coverage units. The Group has elected to discount the future coverage units in this calculation. The table below\u00a0indicates the main
insurance contracts services provided under the Group\u2019s insurance contracts and selected coverage unit(s) used to\u00a0measure those services.
Insurance contract
Insurance service
Coverage unit(s)
Immediate annuity
Payment of insurance claims
Expected annual claims payments
Deferred annuity
Payment of insurance claims (payment phase)
Investment return service (deferral phase)
Lump sum death benefits (deferral phase)
Expected annual claims payments
Expected investment return on backing assets
Sum assured
Longevity swaps
Payment of floating leg of swap
Expected annual floating leg payments
Retail Protection
Potential mortality or morbidity claims
Sum assured
Group Protection
Potential mortality or morbidity claims
Sum assured
Where a specific unit of account contains a mixture of services and therefore coverage units, it is necessary to weight the coverage units so
that the resulting profile of CSM release reflects the overall package of benefits provided. This is particularly pertinent to units of account
incorporating a combination of immediate and deferred annuities. Under IFRS 17, deferred annuities usually provide multiple services, split
between the two phases of benefit provision (the deferral phase and the payment phase). Judgement is therefore required to combine the
different coverage units so that they fairly reflect the services provided. The weighting between the deferral phase and the payment phase
coverage units is calculated so that the services provided in the deferral phase reflect the investment return provided and the probability
weighted delivery of any lump sum death benefits, both adjusted so that all of the CSM is earned in the deferral phase for all contracts
which do not enter the payment phase either through transfer out, withdrawal of funds or death.
Investment components
The Group identifies the investment component of a contract by determining the amount that it would be required to repay to the policyholder
in all scenarios with commercial substance. Investment components are not included in insurance revenue and insurance service expenses.
Insurance finance income and expense
Insurance finance income and expenses comprise changes in the carrying amounts of groups of insurance contracts arising from the effects
of the time value of money, financial risk and changes therein. IFRS 17 requires an accounting policy decision as to whether to recognise all
finance income or expense in profit or loss, or whether to disaggregate the income or expense that relates to changes in financial assumptions into
other comprehensive income. Finance income and expense has been included in profit or loss for all insurance products except for the
Group\u2019s protection business where it has been disaggregated between profit and loss and other comprehensive income. Where insurance
finance income and expense has been disaggregated the amount included in profit or loss is determined by a systematic allocation of the
expected total insurance finance income or expenses over the duration of the group of contracts, using the discount rates determined on
initial recognition.
Changes in the risk adjustment for non-financial risk have been disaggregated between insurance service result and insurance finance
income and expenses.
Reinsurance contracts held \u2013 subsequent measurement
The subsequent measurement of reinsurance contracts held follows the same principles as those for insurance contracts issued except that
changes in the fulfilment cash flows are recognised in profit or loss if the related changes arising from the underlying ceded contracts are
recognised in profit or loss.
Derecognition and contract modification of insurance contracts
The Group derecognises a contract when it is extinguished, i.e. when the specified obligations in the contract expire or are discharged
or cancelled.
The Group also derecognises a contract if its terms are modified in a way that would have changed the accounting for the contract
significantly had the new terms always existed, in which case a new contract based on the modified terms is recognised. If a contract
modification does not\u00a0result in derecognition, then the Group treats the changes in cash flows caused by the modification as changes
in estimates of fulfilment cash\u00a0flows.
Measurement on transition to IFRS 17
On transition to IFRS 17, the insurance contract liabilities were restated, retrospectively applying the Group\u2019s accounting policies. In line with
the provisions available in IFRS 17, the Group applied the full retrospective approach unless impracticable. The full retrospective approach
required the Group to:
\u2022 identify, recognise and measure each group of insurance and reinsurance contracts as if IFRS 17 had always applied
\u2022 derecognise any existing balances that would not exist had IFRS 17 always applied
\u2022 recognise any resulting net difference in equity.
If it was impracticable to apply a full retrospective approach to a group of contracts then the Group selected an approach between the
modified retrospective approach and the fair value approach. If the Group could not obtain reasonable and supportable information
necessary to apply the\u00a0modified retrospective approach, then the fair value approach was selected.
Full retrospective approach
For insurance and reinsurance contracts where the full retrospective approach was adopted, the best estimate and risk adjustment components
of fulfilment cash flows were recognised and measured using the Group\u2019s accounting policies from the inception date of the contracts to the
date of transition. The full retrospective approach was determined to be impracticable where: the effects of retrospective application were not
determinable because information required was not collected (or not with sufficient granularity);`application would require the application of
hindsight; or information was unavailable because of system migrations, data retention requirements or other reasons.
Modified retrospective approach
The objective of the modified retrospective approach is to achieve the closest outcome to retrospective application possible using reasonable
and\u00a0supportable information available without undue cost or effort. For insurance and reinsurance contracts where the modified retrospective
approach has been adopted, the best estimate and risk adjustment components of fulfilment cash flows were recognised and measured
using the Group\u2019s accounting policies at the date of transition except for the application of a permitted transition modification that, for some
groups of contracts issued before 1 January 2021, the risk adjustment for non-financial risk on initial recognition was determined by adjusting
the amount at\u00a01 January 2022 for the expected release of risk before that date. The expected release was determined with reference to the
release of risk of similar contracts that the Group issued in 2022. This modification was used to avoid the application of hindsight to the
calibration of the risk adjustment in prior periods.
Fair value approach
For insurance and reinsurance contracts where the fair value approach has been adopted, the best estimate and risk adjustment components
of\u00a0fulfilment cash flows were determined as at 1 January 2022. The Group determined the contractual service margin (CSM) of the liability
for remaining coverage at the transition date, as the difference between the fair value of the group of insurance contracts and the fulfilment
cash flows measured at that date. In determining fair value, the Group applied the requirements of IFRS 13, \u2018Fair Value Measurement\u2019, except
for the demand deposit floor requirement.
Financial instruments
Recognition and derecognition
Initial recognition of financial assets and liabilities is on the trade date, which is the date on which the Group becomes a party to the
contractual provisions of the instrument. A financial asset or financial liability is initially measured at fair value plus, for a financial asset or
financial liability not\u00a0measured at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issue.
When the fair value of\u00a0financial assets and liabilities differs from the transaction price on initial recognition, the Group recognises the
difference as follows:
\u2022 when the fair value is evidenced by a quoted price in an active market for an identical asset or liability (i.e. a Level 1 input) or based
on\u00a0a\u00a0valuation technique that uses only data from observable markets, the difference is recognised as a gain or loss
\u2022 in all other cases, the difference is deferred and the timing of recognition of deferred day one profit or loss is determined individually.
It is either amortised over the life of the instrument, deferred until the instrument\u2019s fair value can be determined using market observable
inputs or realised through settlement.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when the Group transfers
substantially all the risks and rewards of ownership to another entity. This is the case for cash collateral pledged, where the counterparty
has contractual rights to receive the cash flows generated and which is derecognised from the Consolidated Balance Sheet and a
corresponding receivable recognised for its return.
The Group enters into transactions whereby it transfers assets recognised in its Consolidated Balance Sheet, but retains either all or
substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognised. Examples
of such transactions are repurchase agreements and non-cash collateral pledged, unless the Group defaults on its obligations under the
relevant agreement.
In transactions in which the Group neither retains nor transfers substantially all of the risks and rewards of ownership of a financial asset
and it retains control over the asset, the Group continues to recognise the asset to the extent of its continuing involvement, determined
by the extent to\u00a0which it is exposed to changes in the value of the transferred asset.
The Group derecognises a financial liability when its contractual obligations expire or are discharged or cancelled. The Group also
derecognises a\u00a0financial liability when its terms are modified and the cash flows of the modified liability are substantially different,
in which case a new financial liability based on the modified terms is recognised at fair value.
On derecognition of a financial asset or financial liability, the difference between the carrying amount at the date of derecognition and the
consideration received (including any new asset obtained less any new liability assumed) is recognised in profit or loss.
Modification
If the terms of a financial asset are modified, then the Group evaluates whether the cash flows of the modified asset are substantially
different. If\u00a0the cash flows are substantially different, then the contractual rights to cash flows from the original financial asset are deemed
to have expired. In this case, the original financial asset is derecognised and a new financial asset is recognised at fair value plus any eligible
transaction costs.
Classification and measurement of financial assets
The Group classifies its financial assets on initial recognition as measured at amortised cost, fair value through other comprehensive income
(FVOCI) and fair value through profit or loss (FVTPL).
The classification and measurement of financial assets depends on their contractual cash flow characteristics and how they are managed
(the entity\u2019s business model). The contractual cash flow characteristics test aims to identify those assets with cash flows consistent with a
basic lending arrangement, i.e. which are \u2018solely payments of principal and interest\u2019 (SPPI). The business model test refers to how an entity
manages its financial assets with the objectives of generating cash flows. These factors determine whether the financial assets are measured
at amortised cost, FVOCI or FVTPL. Assets are therefore typically characterised as follows:
\u2022 amortised cost: financial assets with contractual terms that give rise solely to interest and principal cash flows and which are held in a
business model whose objective is to hold the assets to collect their cash flows. They are measured at amortised cost using the effective
interest method. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on
derecognition is also recognised in profit or loss
\u2022 FVOCI: financial assets with contractual terms that give rise solely to interest and principal cash flows and which are held in a business
model whose objective is achieved by holding the assets to collect their cash flows and selling them. Interest income calculated using the
effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses
are recognised in other comprehensive income. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss
\u2022 FVTPL: all other financial assets. Net gains and losses, including any interest or dividend income and foreign exchange gains and losses,
are\u00a0recognised in profit or loss, unless they arise from derivatives designated as hedging instruments in cash flow or net investment hedges.
Notwithstanding the above, on initial recognition the Group may irrevocably designate to FVTPL a financial asset that would otherwise be
measured at amortised cost or FVOCI if doing so eliminates or greatly reduces an accounting mismatch.
In making the SPPI assessment, the Group considers whether the contractual cash flows are consistent with a basic lending arrangement (that
is, interest includes only consideration for the time value of money, credit risk, other basic lending risks and a profit margin that is consistent with
a basic lending arrangement). This includes evaluating whether the financial asset contains a contractual term that could change the timing or
amount of contractual cash flows such that it would not meet this condition. Examples of such contractual terms to be considered are contingent
events that would change the amount or timing of cash flows, leverage features, prepayment and extension features, non-recourse asset
arrangements and features that modify consideration for the time value of money (e.g. periodic reset of interest rates).
The business model reflects how the Group manages assets in order to generate cash flows, i.e. it reflects whether the Group\u2019s objective
is solely to collect the contractual cash flows from assets or to collect both the contractual cash flows and cash flows arising from the sale
of assets. If neither of these is applicable (for example, financial assets are held for trading purposes), the business model is \u2018other\u2019 and the
financial asset is measured at FVTPL. Factors considered by the Group in determining the business model for a group of assets include past
experience on how the cash flows for these assets were collected, how the asset\u2019s performance is evaluated and reported to key
management personnel, how risks are assessed and managed and how managers are compensated.
The objective of the Group\u2019s business model for certain debt instruments, in particular those instruments backing annuity or investment
contract liabilities, including surplus assets, is to fund its liabilities. Consistent with the Group\u2019s investment strategy their performance is
evaluated on a total return basis, as significant buying and selling activity is undertaken on a regular basis to rebalance its portfolio and
to ensure that contractual cash flows from those assets are sufficient to settle the underlying liabilities. These investments do not follow a
\u2018held to collect\u2019 or \u2018held to collect and sell\u2019 business model and are therefore accounted for at FVTPL. This business model is also applicable
to reverse repurchase agreements and to derivatives. Equity instruments are accounted for at FVTPL.
Certain debt securities are held in separate portfolios for long-term yield. These include long-dated debt instruments backing annuities
liabilities, but in surplus to the IFRS 17 best estimate liability and risk adjustment, used to manage interest and inflation rate exposure, as
well as assets backing protection liabilities. These assets represent instruments consistent with the SPPI principles and are accounted for
at amortised cost or\u00a0FVOCI depending on the expected level of trading.
Receivables are accounted for at amortised cost.
Classification and measurement of financial liabilities
The Group classifies and subsequently measures financial liabilities at amortised cost or FVTPL.
Investment contract liabilities
Investment contract liabilities are measured at FVTPL. This is because these liabilities, as well as the related assets, are managed and their
performance evaluated on a fair value basis. For unit linked liabilities, fair value is determined by reference to the value of the underlying net
asset values of the Group\u2019s unitised investment funds at the balance sheet date.
Core and operational borrowings
Borrowings are recognised initially at fair value, net of transaction costs. Borrowings are subsequently stated at amortised cost. The
difference between the net proceeds and the redemption value is recognised in the income statement over the borrowing period using
the effective interest rate method.
Other financial liabilities
Other financial liabilities include derivative liabilities, repurchase agreements and trail commission, which are measured at FVTPL, while
other payable balances are measured at amortised cost.
Derivatives
Derivatives are initially recognised at fair value on the date on which the derivative contract is entered into. The Group\u2019s derivatives, other
than those designated as hedging instruments in cash flow or net investment hedges, are instruments held for trading and, are therefore
accounted for\u00a0at FVTPL.
Derivatives may be embedded in another contractual arrangement. If such a hybrid contract contains a host that is a financial asset, the
Group assesses the entire contract for classification and measurement purposes. Otherwise, the Group accounts for an embedded derivative
separately from the host contract when:
\u2022 its economic characteristics and risks are not closely related to those of the host contract
\u2022 the terms of the embedded derivative would have met the definition of a derivative if they were contained in a separate contract
\u2022 the hybrid contract is not measured at FVTPL.
These embedded derivatives are separately accounted for at FVTPL, unless the Group chooses to designate the entire hybrid contract at FVTPL.
A derivative embedded in a host insurance or reinsurance contract is not accounted for separately from the host contract if the embedded
derivative itself meets the definition of an insurance or reinsurance contract.
Collateral
Collateral received in the form of cash, which is not legally segregated from the Group, is recognised as an asset in the Consolidated Balance
Sheet with a corresponding liability for the repayment in Payables and other financial liabilities. However, where the Group has a currently
enforceable legal right of set-off and the ability and intent to net settle, the collateral liability and associated derivative balances are shown net.
Non-cash collateral received is not recognised in the Consolidated Balance Sheet unless the transfer of the collateral meets the derecognition
criteria from the perspective of the transferor. Such collateral is typically recognised when the Group either: (a) sells or repledges these assets
in the absence of default, at which point the obligation to return this collateral is recognised as a liability; or (b) the counterparty to the
arrangement defaults, at which point the collateral is seized and recognised as an asset.
Collateral pledged in the form of cash, which is legally segregated from the Group, is derecognised from the statement of financial position
with a\u00a0corresponding receivable recognised for its return. Non-cash collateral pledged is not derecognised from the statement of financial
position unless the Group defaults on its obligations under the relevant agreement and therefore continues to be recognised in the
Consolidated Balance Sheet within Financial investments.
Impairment of financial assets
The Group assesses on a forward-looking basis the expected credit loss (ECL) associated with its financial assets measured at amortised
cost and FVOCI and recognises a loss allowance for such losses at each reporting date. Expected credit losses are defined as the present
value of the difference between all contractual cash flows that are due and all cash flows that the entity expects to receive (i.e. the cash
shortfall), weighted based on their probability of occurrence. The loss allowance recognised under IFRS 9 can be equal to an amount
corresponding to a 12-month ECL or a lifetime ECL. A lifetime ECL is the ECL resulting from all possible default events over the expected
life of the financial asset; a 12-month ECL is the portion of lifetime ECL resulting from default events on a financial asset that are possible
within the 12 months after the reporting date. For a financial asset that is credit-impaired at the reporting date, but that is not a purchased or
originated credit-impaired financial asset, expected credit losses are measured as the difference between the asset\u2019s gross carrying amount
and the present value of estimated future cash flows, discounted at the financial asset\u2019s original effective interest rate. Any adjustment is
recognised in profit or loss as an impairment gain or loss.
The Group defines default on a financial asset as the inability to meet in full and on time an original promise of expected cash flows,
the amount and timing of which are defined with certainty. Any breach of this promise, by any amount or time (in excess of any potential
planned grace period), constitutes a default. This is consistent with the definition of default used for internal credit risk management
purposes. An asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of
that financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable data:
\u2022 significant financial difficulty of the borrower
\u2022 a breach of contract, such as a default or past due event
\u2022 the restructure of a loan by the Group on terms which it would not otherwise consider
\u2022 it becomes probable that the borrower will enter bankruptcy or other financial reorganisation.
A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.
The ECL model is run from the date of initial recognition of a financial asset and its output updated at every reporting period, even if no actual
loss events have taken place. The impact of updating the inputs of the ECL model in the reporting period is recognised in profit or loss directly
where it affects the carrying value of financial assets at amortised cost, while for assets at FVOCI an equal and opposite movement is
recorded in other comprehensive income.
In order to determine whether the Group measures ECLs at an amount equal to 12-month ECL or lifetime ECL, at each reporting period
the Group is required to assess which \u2018stage\u2019 a financial asset falls into. Stages reflect the general pattern of deterioration in credit risk
of a financial instrument that ultimately defaults, as follows:
\u2022 Stage 1 includes financially healthy financial assets that are expected to perform in line with their contractual terms and which have
no signs of\u00a0increased credit risk
\u2022 Stage 2 includes financial assets for which a significant increase in credit risk has occurred since initial recognition, but which are not
credit-impaired
\u2022 Stage 3 applies to credit-impaired financial instruments.
When financial assets are under Stage 1, 12-month ECLs are recognised. When financial assets are under Stage 2 or 3, lifetime ECLs are
recognised. An instrument moves down (or up) the stages when a significant increase in credit risk (SICR) has happened (or has reversed).
When determining whether the credit risk of a financial instrument has increased significantly since initial recognition, the Group considers
reasonable and supportable information, both qualitative and quantitative, that is relevant and is available without undue cost or effort,
including forward-looking information at its disposal. Key indicators used in order to determine whether a SICR has occurred (either in
isolation or in combination) are:
\u2022 deterioration in rating grade between origination date and reporting date. The level of deterioration required by an individual asset is
determined using a relative rating matrix
\u2022 exposure is identified on the investment managers\u2019 \u2018watchlist\u2019
\u2022 exposure is identified on internal \u2018credit watchlists\u2019
\u2022 a manual shift of an exposure to Stage 2 on an exceptional basis (where required, using management judgement).
The provisions of IFRS 9 include a rebuttable presumption that the credit risk on a financial asset has increased significantly since initial
recognition when contractual payments are more than 30 days past due, which is taken into account for this assessment.
The Group makes use of a practical expedient available in IFRS 9 whereby it can be assumed that the credit risk on a financial instrument
has\u00a0not\u00a0increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date
(e.g.\u00a0investment grade as determined by the Group\u2019s asset managers). This allows recognition of 12-month ECLs as opposed to, potentially,
lifetime ECLs. This is deemed to be the case where assets that have been downgraded remain of good credit quality (i.e. investment grade
as\u00a0determined by the Group\u2019s asset managers) as at the reporting date, to the extent that, where relevant, the Group\u2019s internal credit risk
ratings are considered to be consistent with a globally understood definition of \u2018low credit risk\u2019.
The Group estimates ECLs on its financial investments at amortised cost and debt instruments at FVOCI which are not credit-impaired
by using the probability of default approach. Based on this method, the ECLs are a probability-weighted estimate of the present value of
estimated cash shortfalls, i.e. the weighted average of credit losses, with the respective risks of a default occurring used as the weightings.
For this purpose, the key elements to be calculated are the Probability of Default (PD), i.e. the estimate of the likelihood of default over a
given time horizon (either 12 months or lifetime); the respective Loss Given Default (LGD); and the Exposure at Default (EAD).
Exposures that move into Stage 3 are able to transition back to Stage 2 if the asset no longer meets the definition of default. Similarly,
exposures will re-transition from Stage 2 to Stage 1 where the SICR indicators no longer apply. No separate cure or probation periods are
applied on the basis that assets will not be re-rated or moved out of default until there is evidence of stable and improved performance.
In order to determine 12-month or lifetime PDs the Group\u2019s models utilise historical data obtained from S&P and Moody\u2019s in order to
evaluate transitions (i.e. the probability that a security changes rating in a given year) and defaults, plus scenario-specific annual scaling
factors which adjust the PDs for forward-looking information. The final PDs produced by the model are unconditional, i.e. they incorporate
both the probability of not defaulting until the start of the period and the subsequent probability of default in that period, conditional on the
position not having defaulted to that point. This allows them to be summed over 12 months to provide 12-month PD estimates, or over all
remaining months to produce lifetime PD estimates.
LGD is the magnitude of the likely loss if there is a default, based on the history of recovery rates of claims against defaulted counterparties
and taking into account collateral values where applicable.
EAD represents the expected exposure in the event of a default. The Group estimates LGD based on the history of recovery rates of claims
against defaulted counterparties. Appropriate haircuts are applied to baseline unsecured LGDs and used in conjunction with forecast
collateral values to estimate LGD for assets secured by collateral.
The Group has adopted a simplified approach for trade receivables, contract assets and finance and operating lease receivables. This allows
measurement of lifetime ECLs only, thereby removing the need to identify SICRs. For these balances, the Group makes use of provision
matrices in order to calculate such lifetime ECLs. This is a practical expedient allowed by IFRS 9 whereby historical credit loss experience
and fixed loss rates are applied to the balances outstanding. Historical loss rates are adjusted to allow for forward-looking information.
Hedge accounting
The Group uses hedge accounting, provided the prescribed criteria are met, to recognise the offsetting effects of changes in the fair value
or cash flow of the derivative instrument and the hedged item. Hedge accounting can be applied in order to:
\u2022 hedge the exposure to fair value movements of a recognised asset or liability or an unrecognised firm commitment, or a component
of any such item, that is attributable to a particular risk and could affect the Consolidated Income Statement
\u2022 hedge the exposure to variability in cash flows attributable to a particular risk associated with all, or a component of, a recognised asset
or liability, or a highly probable forecast transaction, that could affect the Consolidated Income Statement
\u2022 hedge the exposure to the currency risk associated with a net investment in a foreign operation.
The relationship between the hedging instrument and the hedged item, together with the risk management objective and strategy for
undertaking the hedge transaction, are documented formally at the inception of the transaction. The documentation includes identification of
the hedging instrument, the hedged item, the nature of the risk being hedged and how the Group will assess whether the hedging relationship
meets the hedge effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the hedge ratio is determined).
A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements:
\u2022 there is an economic relationship between the hedged item and the hedging instrument
\u2022 the effect of credit risk does not dominate the value changes that result from that economic relationship
\u2022 the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually
hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
The effective portion of the gain or loss on the hedging items is recognised in the Consolidated Statement of Comprehensive Income and
in a separate reserve within equity (cash flow hedge). The gain or loss relating to the ineffective portion is recognised immediately in the
Consolidated Income Statement. Amounts accumulated in equity are reclassified in the periods when the hedged item affects profit or loss.
The change in fair value of the hedging instrument related to the basis spread or forward points movements is recognised in a separate
component of equity (cost of hedging reserve) to the extent that it relates to the hedged item (cost of hedging reserve) and expensed on
a systematic and rational basis over the period of the hedge relationship.
Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date.
Fair value measurements are based on observable and unobservable inputs. Observable inputs reflect market data obtained from
independent sources, while unobservable inputs reflect the Group\u2019s view of market assumptions in the absence of observable market
information. The Group utilises techniques that maximise the use of observable inputs and minimise the use of unobservable inputs.
The best evidence of the fair value of a financial instrument at initial recognition is normally the transaction price. In certain circumstances,
the fair value at initial recognition differs from the transaction price. If the fair value is evidenced by comparison by a quoted price in an active
market for an identical instrument, or is based on a valuation technique that uses only data from observable markets, the difference between
the fair value at initial recognition and the transaction price is recognised as a gain or loss in the Consolidated Income Statement. In all other
cases, the difference between the fair value at initial recognition and the transaction price is deferred and recognised in the Consolidated
Income Statement over the life of the instrument to the extent that it arises from a change in a factor (including time) that market participants
would take into account when pricing the instrument.
Revenue
Insurance revenue
The Group\u2019s insurance revenue depicts the provision of services arising from a group of insurance contracts, reflecting the consideration
the Group expects to be entitled to in exchange for those services. Insurance revenue from a group of insurance contracts is therefore the
relevant portion for the period of the total consideration for the contracts, (i.e. the amount of premiums paid to the Group adjusted for
financing effect (the\u00a0time value of money) and excluding any investment components).
The total consideration for a group of contracts covers amounts related to the provision of services and comprises:
\u2022 the release of the CSM
\u2022 changes in the risk adjustment for non-financial risk relating to current service
\u2022 claims and other insurance service expenses expected at the beginning of the period
\u2022 experience adjustments arising from premiums received in the period other than those that relate to future service
\u2022 insurance acquisition cost recovery determined by allocating the portion of premiums related to the recovery of those costs on the basis
of\u00a0insurance coverage provided
\u2022 other amounts, including any other pre-recognition cash flow assets derecognised at the date of initial recognition.
Fees from fund management and investment contracts
The Group generates revenue from acting as the investment manager for clients. Fees charged on investment management services are
based on the contractual fee arrangements applied to assets under management and recognised as revenue as the services are provided.
The Group\u2019s income from investment contracts is primarily derived from fees for administration and managing of funds in pension plans.
Revenue generated on investment contracts is recognised as services are provided. No significant judgements are applied on the timing or
transaction price. In the instances of performance fees where revenue is subject to meeting a certain performance threshold, such revenue is
not recognised until the condition has been met and it is highly probable that no significant reversal of amounts would occur. Variable costs
directly related to\u00a0securing new contracts are capitalised and amortised over the estimated period over which the revenue is earned.
Transaction fees are charged to implement trades for clients. Such fees are charged at the time the transaction takes place and are based
on\u00a0the\u00a0size of the underlying contract.
Other operational income from contracts with customers
House building
House building revenue arises from the sale of residential properties and land and is recognised net of discounts and sales incentives.
It also includes sale proceeds of part exchange properties. Sales of private houses are recognised on legal completion. Sales of social
housing, where multiple units are developed and sold under a contractual agreement with a single customer, typically a housing association,
are recognised over time in accordance with construction progress. Sales of land and commercial property are recognised on unconditional
exchange, namely when contracts are exchanged or missives concluded and, where appropriate, construction is complete. The transaction
price is determined using extensive research and expert judgement, current market values and regional variations.
Warranties are provided on all properties and range from 2-10 years. Due to their features, these do not represent separate performance obligations.
Professional services fees
The Group\u2019s professional services fees revenue arises from professional services provided by employed surveyors and third-party providers,
panel\u00a0management fees and administration fees. These fees are based on fee scales or contracts. Revenue is recognised when the service
has\u00a0been rendered.
In addition, the Group derives professional fees from facilitation of mortgage arrangements and related products such as conveyancing. These are
based on an agreement/contract and could be tiered based on volume. The obligation in such instances is satisfied on completion of the mortgage/
service, at which point the revenue is recognised. There is no significant judgement applied on the timing or amount of fee recognised.
Insurance broker fees
Fees are charged on each performance obligation offered to the customer as per agreed structure. Revenue for placement services is
recognised at the point in time when the intermediary has satisfied its performance obligation, that is when the terms of the insurance
policy have been agreed contractually by the insurer and policyholder and the insurer has a present right to payment from the policyholder.
No significant judgements are applied on the timing or transaction price.
Investment return
Investment return includes unrealised fair value gains and losses on financial investments at fair value through profit or loss, realised gains
and\u00a0losses, dividends, rent and interest. Dividends are accrued on an ex-dividend basis. Interest income is recognised as it accrues, taking into
account the effective yield on the investment. Rental income is recognised on an accruals basis and is generally recognised on a straight line
basis unless there is compelling evidence that benefits do not accrue evenly over the period of the lease. Interest income for financial assets
which are not classified as fair value through profit or loss (FVTPL) is recognised using the effective interest method.
A gain or loss on a financial investment is only realised on disposal or transfer and is the difference between the proceeds received, net
of transactions cost and its original cost or amortised cost, as appropriate. Realised gains or losses on investment property represent the
difference between the net disposal proceeds and the carrying value of the property.
Unrealised gains and losses represent the difference between the carrying value at the end of the year and the carrying value at the previous
year end or purchase value during the year, less the reversal of previously unrealised gains and losses in respect of disposals made during
the year.
Insurance service expenses
Insurance service expenses arising from insurance contracts are recognised in profit or loss as they are incurred. They exclude repayments
of investment components and comprise the following items:
\u2022 incurred claims and benefits, excluding investment components reduced by loss component allocations
\u2022 incurred directly attributable expenses
\u2022 insurance acquisition cost amortisation
\u2022 insurance acquisition cost asset impairment.
Dividends
Interim dividends on ordinary shares are deducted from retained earnings in the period in which they are paid. Final dividends on ordinary
shares are recognised as a liability in the period in which they have been approved by shareholders of the Company.
Earnings per share
Earnings per share is a measure of the portion of the Group\u2019s profit allocated to each outstanding share. It is calculated by dividing net
income attributable to ordinary equity holders by the weighted average number of ordinary shares in issue during the year, excluding
employee scheme treasury shares. For this purpose, net income is defined as the profit after tax, attributable to equity holders of the
Company, derived from continuing operations.
For diluted earnings per share, the weighted average number of ordinary shares in issue, excluding employee scheme treasury shares, is
adjusted to assume conversion of all dilutive potential ordinary shares, such as share options granted to employees. Potential or contingent
share issuances are treated as dilutive when their conversion to shares would decrease net earnings per share.
Intangible assets
Intangible assets mainly consist of capitalised software costs.
Where software costs are separately identifiable and measurable, they are capitalised at cost and amortised over their expected useful life
on a straight-line basis. Costs incurred to internally develop software are only capitalised if the expenditure can be measured reliably, the
product or process is technically and commercially feasible, future economic benefits are probable and the Group intends to and has
sufficient resources to\u00a0complete such development and to use or sell the asset. Otherwise, such costs are recognised in profit or loss as
incurred. The estimated amortisation period for IT development costs and software is between 3 and 10 years.
Intangible assets acquired via business combinations are recognised at fair value and are subsequently amortised on a straight-line basis
over their estimated useful life.
Amortisation methods, useful lives and any expected residual values are reviewed at each reporting date and adjusted if appropriate.
Intangible assets are tested for impairment either individually or at the cash-generating unit level. Intangible assets with indefinite useful
lives and intangible assets not yet available for use are tested for impairment at least annually, or whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. Intangible assets with finite useful lives are tested when there are indications
of impairment. The recoverable amount is the higher of an asset\u2019s fair value less costs to sell and its value in use.
Investment property
Investment property comprises land and buildings which are held for long-term rental yields and capital growth, as well as right-of-use
assets of the same nature and are not occupied by the Group. Completed investment property is carried at fair value with changes in fair
value recognised in the Consolidated Income Statement within Investment return. Investment properties under construction are included
within Property, plant and equipment and are stated at cost less any impairment until construction is completed or fair value becomes
reliably measurable.
Non-current assets held for sale
Assets and liabilities part of a disposal group classified as held for sale are shown separately in the Consolidated Balance Sheet. They are
recorded at the lower of their carrying amount and their fair value less costs to sell.
Discontinued operations
Discontinued operations comprise those activities that were disposed of or classified as held for sale at the end of the period and represent
a separate major line of business or geographical area that can clearly be distinguished for operational and financial reporting purposes.
The results of discontinued operations are presented separately in the Consolidated Income Statement and Consolidated Statement of
Comprehensive Income. Comparatives are re-presented where applicable.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, treasury bills and other short-term highly liquid
investments with maturities of three months or less from the date of acquisition.
Property, plant and equipment
Property, plant and equipment includes tangible assets owned by the Group (such as land and office and other buildings) or held under lease
arrangements (such as office buildings, IT equipment and vehicles). Property, plant and equipment includes owner occupied property held by a
fund, the units of which determine benefits for its investors. In accordance with IAS 16, \u2018Property, Plant and Equipment\u2019, the Group has elected
to measure this asset at fair value, with changes in fair value recognised in the Consolidated Income Statement within Investment return.
All other assets within Property, plant and equipment are carried at historical cost less accumulated depreciation, calculated on a straight-
line basis over their estimated useful life. Amortisation methods, useful lives and any expected residual values are reviewed at each
reporting date and\u00a0adjusted if appropriate.
An impairment review of Property, plant and equipment not carried at fair value is performed whenever events or changes in circumstances
indicate that their carrying amount may not be recoverable. Where the carrying amount of an asset is greater than its estimated recoverable
amount, which is the higher of the assets fair value less costs of disposal and value in use, it is written down immediately to its recoverable
amount, with an impairment loss recognised in the Consolidated Income Statement.
Leases
Lessee
Where the Group is a lessee, it recognises leases on the Consolidated Balance Sheet as \u2018right-of-use\u2019 assets and lease liabilities.
The right-of-use assets\u2019 value is initially recognised as the calculated value of the lease liabilities, initial direct costs and incentives received.
The right-of-use assets are subsequently accounted for in accordance with the cost model in IAS 16, \u2018Property, Plant and Equipment\u2019 or as
investment property under IAS 40, \u2018Investment Property\u2019. The Group also assesses right-of-use assets classified as Property, plant and
equipment for impairment when such indicators exist.
The initial measurement of the lease liabilities is made up of the present value of lease payments to be made over the lease term, including
fixed lease payments and excluding lease incentive receivables. The Group uses the incremental borrowing rate as a discount rate for
calculating the lease liabilities. The lease liabilities are unwound over the term of the lease giving rise to an interest expense. Additionally,
the liabilities are reduced when lease payments are made. The Group reassesses the carrying amount of lease liabilities and right-of-use
assets if certain events occur that modify the original assumptions used to calculate the lease balances upon initial recognition.
The Group leases offices, vehicles, IT equipment and investment properties under non-cancellable operating lease agreements. The
Group has elected to make use of the recognition exemptions as permitted in respect of short-term leases (lease contracts with a term
of 12 months or less) and lease contracts for which the underlying asset is of low value. Such leases are not recognised on the Consolidated
Balance Sheet but the Group recognises the associated lease payments as an expense over the lease term.
Lessor
Where the Group is the lessor, leases are classified as finance leases if the risks and rewards of ownership are substantially transferred to
the lessee and operating leases if they are not substantially transferred.
The Group leases certain investment properties to third parties. Under these agreements, substantially all the risks and rewards incidental to
ownership are transferred to the lessee and therefore the contracts have been classified as finance leases. At the lease commencement date,
the\u00a0Group derecognises the investment property asset and recognises a receivable asset on its Consolidated Balance Sheet to reflect the net
investment in the\u00a0lease, equal to the present value of the lease payments. The Group recognises finance income over the lease term to reflect
the rate of return on\u00a0the net investment in the lease.
Under other lease agreements the Group is considered to substantially retain all the risks and rewards of ownership of the underlying asset,
therefore these contracts have been classified as operating leases. Lease income from operating leases is recognised in the Consolidated
Income Statement on\u00a0a straight-line basis over the lease term.
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow
of\u00a0resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can
be\u00a0made. Where the Group expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised
as\u00a0a\u00a0separate asset but only when the reimbursement is virtually certain. The Group recognises a provision for onerous contracts when the
expected benefits to be derived from a contract are less than the unavoidable costs of meeting the obligations under the contract.
Tax
Current tax
Current tax comprises tax payable on current year profits, adjusted for non-tax deductible or non-taxable items and any adjustments to tax
payable in respect of previous periods. Current tax is recognised in the Consolidated Income Statement unless it relates to items which are
recognised in the Consolidated Statement of Comprehensive Income or directly in equity.
Deferred tax
Deferred tax is calculated on differences between the accounting value of assets and liabilities and their respective tax values. Deferred tax
is also recognised in respect of unused tax losses to the extent it is probable that future taxable profits will arise against which the losses
can be utilised. Deferred tax is charged or credited to the Consolidated Income Statement, except when it relates to items charged or
credited to the Consolidated Statement of Comprehensive Income or charged or credited directly in equity.
Tax attributable to policyholders and equity holders
The total tax expense shown in the Group\u2019s Consolidated Income Statement includes income tax borne by both policyholders and equity
holders. This has been split between tax attributable to policyholders\u2019 returns and equity holders\u2019 profits. Policyholder tax comprises the
tax suffered on policyholder investment returns, while equity holder tax is corporation tax charged on equity holder profit. The separate
presentation is intended to provide more relevant information about the tax that the Group pays on the profits that it makes.
Use of estimates
Tax balances include the use of estimates and assumptions which affect items reported in the Consolidated Balance Sheet, Consolidated
Income Statement and Consolidated Statement of Comprehensive Income. Although these estimates are based on management\u2019s best
knowledge of current circumstances and future events and actions, actual results may differ from those estimates.
For tax this includes the determination of assets and liabilities recognised in respect of uncertain tax positions and the estimation of future
taxable income supporting deferred tax asset recognition.
As the Group operates internationally, it is exposed to uncertain tax positions and changes in legislation in the jurisdictions in which it
operates. The assessment of uncertain tax positions is subjective and significant management judgement is required. This judgement is
based on interpretation of legislation, management experience and professional advice. The directors have assessed the Group\u2019s uncertain
tax positions and are comfortable that the provisions in place are not material individually or in aggregate and that a reasonable possible
alternative outcome in the\u00a0next financial year would not have a material impact to the results of the Group.
Foreign exchange and exchange rates
Foreign currency transactions are translated into the functional currency using the exchange rate prevailing at the date of the transactions.
The\u00a0functional currency of the Group\u2019s foreign operations is the currency of the primary economic environment in which the entity operates.
The\u00a0assets and liabilities of all of the Group\u2019s foreign operations are translated into sterling, the Group\u2019s presentation currency, at the closing
rate\u00a0at\u00a0the date of the Consolidated Balance Sheet. Income and expenses are translated at average exchange rates. On consolidation,
exchange differences arising from the translation of the net investment in foreign entities and of borrowings and other currency instruments
designated as\u00a0hedges of such investments, are taken to a separate component of shareholders\u2019 equity.
Foreign exchange gains and losses are recognised in the Consolidated Income Statement, except when recognised in equity as qualifying
cash flow or net investment hedges.
Share-based payments
The Group accounts for options and awards under equity compensation plans, until such time as they are fully vested, using the fair value
based\u00a0method of accounting. The fair value at the date of grant of the equity instrument is recognised as an expense, spread over the vesting
period of the instrument. The total amount to be expensed is determined by reference to the fair value of the awards, excluding the impact of
any\u00a0non-market vesting conditions. At each balance sheet date, the Group revises its estimate of the number of equity instruments which are
expected to become exercisable. It recognises the impact of the revision of original estimates, if any, in the Consolidated Income Statement
and a\u00a0corresponding adjustment is made to equity. On vesting or exercise, the difference between the expense charged to the Consolidated
Income Statement and the actual cost to the Group is\u00a0transferred to Retained earnings. Where new shares are issued, the proceeds received
are credited to Share capital and Share premium.
Share capital, share premium and employee scheme treasury shares
An equity instrument is any contract which evidences a residual interest in the net assets of an entity. It follows that a financial instrument
is\u00a0treated as equity if:
\u2022 there is no contractual obligation to deliver cash or other financial assets or to exchange financial assets or liabilities on unfavourable
terms
\u2022 the instrument is either a non-derivative which contains no contractual obligation to deliver a variable number of own equity instruments,
or\u00a0is\u00a0a\u00a0derivative which will be settled only by the Group exchanging a fixed amount of cash, or other financial assets, for a fixed number
of\u00a0its\u00a0own equity instruments.
Where any Group entity purchases the Company\u2019s equity share capital, the consideration paid, including any directly attributable
incremental costs\u00a0(net of income taxes), is deducted from equity attributable to shareholders. Where such shares are subsequently
sold, reissued or otherwise\u00a0disposed of, any consideration received is included in equity attributable to shareholders, net of any directly
attributable incremental transaction costs and the related income tax effects. Shares held on behalf of employee share schemes are
disclosed as such on the Consolidated Balance Sheet.
Fiduciary activities
Assets associated with fiduciary activities and the income arising from those assets, together with associated commitments to return such
assets to customers, are not included in these financial statements. Where the Group acts in a fiduciary capacity, for instance as a trustee
or\u00a0agent, it has no contractual rights over the assets concerned.
(ix) Foreign exchange and exchange rates
The principal foreign exchange rates used for translation are:
Year end exchange rates
2025
2024
US Dollar
1.35
1.25
Euro
1.15
1.21
Average exchange rates
2025
2024
US Dollar
1.32
1.28
Euro
1.17
1.18
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-569": { "value": "
1. Basis of preparation and accounting policies
Legal & General Group Plc, a public limited company incorporated and domiciled in England and Wales, operates across three broad
business areas of institutional retirement, asset management and retail (insurance and retirement), through its subsidiaries and associates
in\u00a0the United Kingdom (UK), the United States, Bermuda and other countries throughout the world.
(i) Basis of preparation
The Group financial statements, which comprise the information on pages 131 to 234, except the information disclosed as being unaudited,
have been prepared in accordance with UK-adopted international accounting standards, comprising International Accounting Standards
and\u00a0IFRS as issued by the International Accounting Standards Board (IASB) and related interpretations issued by the IFRS Interpretations
Committee. Endorsement is granted by the UK Endorsement Board (UKEB). The Group financial statements have been prepared under the
historical cost convention, as modified by the revaluation of investment property, financial assets at fair value through other comprehensive
income and certain assets and financial liabilities (including derivative instruments) at\u00a0fair value through profit or loss.
The Group has selected accounting policies which state fairly its financial position, financial performance and cash flows for a reporting
period. The accounting policies have been consistently applied to all years presented unless otherwise stated.
Financial assets and financial liabilities are disclosed gross in the Consolidated Balance Sheet unless a legally enforceable right of offset
exists and there is an intention to settle recognised amounts on a net basis. Income and expenses are not offset in the Consolidated Income
Statement unless required or permitted by any accounting standard or International Financial Reporting Interpretations Committee (IFRIC)
interpretation, as detailed in the applicable accounting policies of the Group.
(ii) Going concern
The Group\u2019s business activities, together with the factors likely to affect its future development, performance and position in the current
economic environment are set out in this Annual report and accounts. The financial position of the Group, its cash flows, liquidity position and
borrowing facilities are described in these consolidated financial statements. Principal risks and uncertainties are detailed on pages 42 to 46
The directors have made an assessment of the Group\u2019s going concern, considering both the current performance and the outlook for a period
of at least, but not limited to, 12 months from the date of approval of these consolidated financial statements, using the information available
up to the date of issue of this Annual report and accounts.
The Group manages and monitors its capital and liquidity and applies various stresses, including adverse inflation and interest rate scenarios,
to those positions to understand potential impacts from market downturns. Our key sensitivities and the impacts on our capital position from
a range of\u00a0stresses are disclosed in Note 28 Management of capital resources (this note is unaudited). These stresses do not give rise to any
material uncertainties over the ability of\u00a0the Group to continue as a going concern. Based upon the available information, the directors consider that
the Group has the plans and resources to manage its business risks successfully and that it remains financially strong and well diversified.
Having reassessed the principal risks and uncertainties (both financial and operational) in light of the current economic environment, as detailed
on pages 42 to 46, the directors are confident that the Group and Company will have sufficient funds to continue to meet its liabilities as they
fall due for a period of, but not limited to, 12 months from the date of approval of the financial statements and therefore have considered it
appropriate to adopt the going concern basis of accounting when preparing the financial statements.
(iii) Impact of the sale of the Group's US insurance entity on financial reporting
On 7 February 2025 the Group announced that it had agreed to sell its US insurance entity, comprising its US protection and US pension
risk transfer (PRT) businesses, through the disposal of its entire shareholding in Legal & General America Inc., the parent company of Banner
Life and William Penn, to Meiji Yasuda Life Insurance Company (Meiji Yasuda), a Japanese mutual life insurer, for $2.3bn. The transaction
completed on 2\u00a0February 2026 for proceeds of $2.6bn (which reflects net asset transfers and the impact of business performance since
1 January 2025).
Following completion, Meiji Yasuda became the owner of the Group's US protection business and now holds a 20% economic interest in
its US PRT business. The Group has retained 80% of existing and new PRT business through a new reinsurance agreement with Meiji
Yasuda.
The transaction has had the following impacts on financial reporting:
\u2022 In accordance with IFRS 5, 'Non-current Assets Held for Sale and Discontinued Operations' the Group's US insurance entity qualifies for
classification and measurement as a held for sale disposal group. This includes the entirety of the US protection and US PRT businesses.
\u2022 The disposal group also meets the definition of discontinued operations. As a consequence, the results of the disposal group for the year
ended 31 December 2025 have been presented in separate lines within the Group Consolidated Income Statement and Consolidated
Statement of Comprehensive Income. Comparative information has been re-presented accordingly in line with IFRS 5 requirements.
\u2022 The composition of the Group's reportable segments in accordance with IFRS 8 'Operating Segments', has changed. In preparation for the
completion of the disposal, the results related to the Group's US protection business and 20% of those related to the US PRT business have
now been reported to key decision makers separately. As a consequence, they are no longer included in the results of the Insurance and
Institutional Retirement segments and are now presented separately as \"Non-retained US business\". Exposure to the remaining 80% of the
US PRT business will be retained by way of the new reinsurance agreement and therefore these results continue to be reported within
Institutional Retirement. Segmental information in relation to the prior year has been re-presented where applicable to reflect these changes.
\u2022 The calculation of core operating profit and core operating earnings per share (core operating EPS), two of the Group\u2019s Alternative
Performance Measures (APMs), has been updated. Non-retained US business is no longer considered to be key to achieving the Group\u2019s
strategy and therefore, in line with the definition of core operating profit and core operating EPS, its results are now excluded from their
calculation. Prior year comparatives have been restated accordingly. As a result of the change, core operating profit for the year ended
31 December 2024 has decreased by \u00a382m (from \u00a31,616m to \u00a31,534m). Core operating EPS for the year ended 31 December 2024
has decreased by 1.03pps (from 20.23pps to 19.20pps).
(iv) New standards, interpretations and amendments to published standards that have been adopted by the Group
The Group has applied Amendments to IAS 21, \u2018The Effects of Changes in Foreign Exchange Rates\u2019: \u2018Lack of Exchangeability' for the first
time in the year commencing 1 January 2025, which did not have a material impact on its consolidated financial statements.
(v) Standards, interpretations and amendments to published standards which are not yet effective
Amendments to IFRS 9, \u2018Financial Instruments\u2019 and IFRS 7, \u2018Financial Instruments: Disclosures\u2019: \u2018Amendments to the Classification and
Measurement of Financial Instruments\u2019
These amendments, issued in May 2024, provide the following:
\u2022 clarification around the date of recognition and derecognition of some financial assets and liabilities, with a new exception for some
financial liabilities settled through an electronic cash transfer system
\u2022 clarification and guidance for assessing whether a financial asset meets the solely payments of principal and interest (SPPI) criterion
\u2022 new disclosure requirements for certain instruments with contractual terms that can change cash flows (such as some financial
instruments with features linked to the achievement of environment, social and governance targets)
\u2022 an update to the disclosures for equity instruments designated at fair value through other comprehensive income (FVOCI).
The amendments are effective for annual reporting periods beginning on or after 1 January 2026. These amendments are not expected
to give rise to a material impact on the Group\u2019s consolidated financial statements.
Annual improvements to IFRS Accounting Standards \u2013 Volume 11
The IASB issued its annual improvements in July 2024, which include a collection of minor amendments to accounting standards, applicable
for annual reporting periods beginning on or after 1 January 2026. These are not expected to give rise to a material impact
on the Group\u2019s consolidated financial statements.
IFRS 18, \u2018Presentation and Disclosure in Financial Statements\u2019
IFRS 18, issued in April 2024, will replace IAS 1, \u2018Presentation of Financial Statements\u2019. IFRS 18 introduces new requirements for
presentation within the income statement, including specified totals and subtotals, which aim at increasing comparability of the
financial performance of similar entities, as well as provide more relevant information and transparency to users.
The standard is effective for reporting periods beginning on or after 1 January 2027, with earlier application permitted. The Group is currently
assessing the impacts of the amendments on the consolidated and Company financial statements, in particular around the presentation of its
results within the Consolidated Income Statement and the definition and disclosure of management-defined performance measures.
IFRS 19, \u2018Subsidiaries without Public Accountability: Disclosures\u2019
IFRS 19, issued in May 2024, allows for certain eligible subsidiaries of parent entities that report under IFRS Accounting Standards to apply
reduced disclosure requirements. IFRS 19 is effective for reporting periods beginning on or after 1 January 2027, with early application
permitted, subject to UK endorsement. The Group is not eligible to apply IFRS 19.
(vi) Critical accounting judgements and the use of estimates
The preparation of the financial statements includes the use of estimates and assumptions which affect items reported in the Consolidated
Balance Sheet and Consolidated Income Statement and the disclosure of contingent assets and liabilities at the date of the financial
statements. Although these estimates are based on management\u2019s best knowledge of current circumstances and future events and actions,
material adjustments could be made to the carrying amounts of assets and liabilities within the next financial year. The Audit Committee
reviews the reasonableness of judgements associated with and the application of material accounting policies. The significant accounting
matters considered by the Audit Committee in respect of the year ended 31 December 2025 are included within the Audit Committee report
on page 69.
The major areas of critical accounting judgement on policy application are considered below:
Insurance and investment contract liabilities (Notes 22 and 23): Product classification and the assessment of the significance of\u00a0insurance
risk transferred to the Group in determining whether a contract should be accounted for as an insurance or\u00a0investment\u00a0contract
Contracts which transfer significant insurance risk to the Group are classified as insurance contracts. Contracts that transfer financial risk
(e.g.\u00a0change in interest rate or security price) to the Group but not significant insurance risk are classified as investment contracts.
Judgement is required in order to assess the significance of the transfer of insurance risk within a contract. This assessment is based
on whether the occurrence of an insured event could cause the Group to make significant additional payments, i.e. if the occurrence
of the event causes significantly higher cash out flows for the Group than its non-occurrence.
Certain contracts, which are both insurance and investment, can contain discretionary features representing the contractual right to receive
additional benefits as a supplement to guaranteed benefits under certain conditions, being:
\u2022 that the additional benefits are a significant portion of the total contractual benefits
\u2022 the timing and amount of the additional benefits is at the discretion of the Group
\u2022 that the additional benefits are contractually dependent upon the performance of an entity, fund or specified pool of assets.
Insurance contracts and investment contracts with such discretionary participation features are accounted for under IFRS 17, while
investment contracts without discretionary participation features are accounted for as financial instruments under IFRS 9.
Judgement is therefore required in order to establish whether any additional benefits in an insurance or investment contract meet the above
requirements for being considered discretionary participation features.
Consolidation (Notes 41-43): Assessment of whether the Group controls underlying entities and should therefore consolidate them.
The assessment takes account of various criteria, including decision-making ability, equity holding and the rights to a variable return from
the\u00a0entity.
Control arises when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect
those returns through its power over the entity.
For operating entities this generally accompanies a shareholding of 50% or more in the entity. Subsidiaries that are consolidated where the
Group owns less than 50% of the ordinary share capital (structured entities), are consolidated based on an assessment of control normally
arising from special rights attaching to the class of share owned, other contractual arrangements and factors such as the purpose of the
investee, the nature of its relevant activities, voting rights (including potential voting rights) and substantive and protective rights.
The Group invests in various fund and unit trust entities where it also acts as the asset manager to those entities. In these instances, in
determining whether the Group controls the entities, the assessment focuses on the aggregate economic interests of the Group (direct
interest and expected management fees) and on whether the Group acts as a principal or agent. This includes an assessment of the removal
rights of other investors (their practical ability to allow the Group not to control the fund). Additionally, holdings in such investments can
fluctuate on a daily basis according to\u00a0the participation of the Group and other investors in them. As a result, in determining control, we look
at an assessment of these factors over a\u00a0longer period to mitigate the impact of daily fluctuations which do not reflect the wider facts and
circumstances of the Group\u2019s involvement. This\u00a0is performed in line with the following principles:
\u2022 where the entity is managed by a Group asset manager and the Group\u2019s ownership holding in the entity exceeds 50%, the Group is judged
to\u00a0have control over the entity
\u2022 where the entity is managed by a Group asset manager and the Group\u2019s ownership holding in the entity is between 30% and 50%, the
facts and\u00a0circumstances of the Group\u2019s involvement in the entity are considered, including the rights to any fees earned by the asset
manager from\u00a0the entity, in forming a judgement as to whether the Group has control over the entity
\u2022 where the entity is managed by a Group asset manager and the Group\u2019s ownership holding in the entity is less than 30%, the Group is
judged to\u00a0not have control over the entity, but again the facts and circumstances of the Group\u2019s involvement in the entity are considered.
The following sets out information about the critical accounting assumptions made by the Group about the future and other major sources
of\u00a0estimation uncertainty at the end of the reporting period, that have a significant risk of resulting in a material adjustment to the carrying
amounts of assets and liabilities within the next financial year:
Valuation of insurance contract liabilities (Notes 20-22)
The key judgements around the valuation of insurance contract liabilities relate to the following assumptions:
\u2022 determination of the longevity, mortality and morbidity assumptions used in the calculation of the insurance contract liabilities; the
assumptions for the rate of future longevity, mortality and morbidity are based on the Group\u2019s internal experience and judgements
about how experience may vary in the future. This assessment takes into account market benchmarking, internal experience studies
and independent industry data. The long-term assumptions are adjusted to reflect the Group\u2019s view on the effects of the Covid-19
pandemic on claims experience in the medium to long-term, informed by emerging experience and industry studies
\u2022 determination of the directly attributable expense assumptions used in the calculation of the insurance liabilities. These represent the
expected future costs that relate directly to the fulfilment of the underlying insurance policies and are based on management\u2019s best
estimate of these future costs and on an appropriate allocation between servicing new and existing business
\u2022 determination of valuation interest rates used to discount the liabilities, which are sensitive to the assumptions made, for example, on
credit default of the backing assets. These assumptions take into account consideration of market experience and historic internal data.
The valuation interest rate is also sensitive to the selection of the reference portfolio of assets chosen to back the liabilities
\u2022 determination of the compensation required for bearing the uncertainty about the amount and timing of the cash flows arising from
non-financial risks as insurance contracts are fulfilled, in the calculation of the risk adjustment
\u2022 determination of the weighting of the coverage units, used to calculate the CSM amortisation in the year, between the payment phase
and\u00a0the\u00a0deferral phase for deferred annuities. Judgement is required to combine the different coverage units so that they fairly reflect
the\u00a0services\u00a0provided
\u2022 determination of the transition date CSM under IFRS 17 incorporated judgement. In particular, judgements made in the calculation of the
CSM\u00a0for portfolios transitioned using the fair value approach at 1 January 2022 continue to be a component of the current valuation of
the\u00a0CSM\u00a0until those portfolios expire.
Note 21 includes a sensitivity analysis on post-tax Group profit and Group equity to reasonable alternative assumptions.
Valuation of unquoted illiquid assets and investment property (Note 13)
Determination of fair value of unquoted and illiquid assets and investment property involves judgements in model valuations, through the
incorporation of both observable and unobservable market inputs, which include assumptions that lead to the existence of a range of
plausible valuations for financial assets.
In assessing asset valuation, in line with applicable standards and guidance, the Group has both projected the short-term impact on earnings
and\u00a0cash flows of the current market volatility, while continuing to review the assets\u2019 ability to deliver longer term returns aligned to their
investment cases.
Note 21 includes a sensitivity analysis on the fair value of unquoted illiquid assets and investment property to reasonable alternative assumptions.
(vii) Consideration of climate change
The Group recognises emerging risks from both climate change and nature loss and the interrelationship between our climate and the
natural world. Climate change is the Group\u2019s most material sustainability issue, but the Group continues to develop its understanding
of its impacts and dependencies on nature, concurrently with its consideration of the impacts from climate change.
The Group is exposed to climate change through two broad categories: transition risks from the move to a low-carbon economy and the
impact this has on asset valuation and the economy; and physical risks from the impact on asset holdings as a result of severe weather
events and longer-term shifts in climate.
The Group has integrated climate risk management into its governance framework and has carried out a detailed assessment of how we
could expect climate risk to emerge across our business model. The Group risk mitigation strategy includes setting portfolio carbon intensity
targets, integrating carbon controls into the investment processes through stock exclusions and high carbon escalation, corporate engagement
and implementing high energy efficiency standards into the Group\u2019s directly owned commercial property and housing businesses.
The Group is committed to net zero, promoting a 1.5\u00b0C \u2018Paris-aligned transition\u2019. In order to meet its environmental goals, the Group has set
for itself a\u00a0number of targets and commitments, clearly linked with its business strategy and risk management controls. These are based on
the three key areas of our Group-wide activity, as an asset owner, an asset manager and in our own operations. Metrics and targets have
been defined around the Group\u2019s operational carbon footprint, investment portfolio economic carbon intensity and implied portfolio temperature
alignment. These are being targeted through the decarbonisation of the Group\u2019s balance sheet, investing in the transition, development of
climate friendly investment products and focus on own operations. The Group also continues to drive greater action as an asset manager to
address financially material climate and nature risks in the real economy consistent with our fiduciary duty.
Scenario analysis is performed to help understand the strategic implications of possible climate pathways, including the key features of a
transition to a net zero economy. Plausible scenarios have been developed based on estimations of how the energy system may evolve over
the next 30 years, using the most recent carbon budgets from the Intergovernmental Panel on Climate Change\u2019s Sixth Assessment Report
(AR6) and incorporated latest data on technology costs. These include two different pathways to \u2018below 2\u00b0C\u2019 and a scenario assuming
achievement of net zero. Given the Group\u2019s long-term climate risk relates to transition risk, a fourth scenario assuming global failure to act
on climate change and emissions growth at historical rates has been modelled, but the impacts have not been applied to our portfolio. Such
impacts are driven by physical risks which tend to be highly localised and manifest further into the future and are therefore more uncertain.
However, more broadly on physical risks, our modelling capabilities allow us to assess how acute events, such as floods and storms in the
High emissions scenario, may affect asset values, operations, and long-term resilience, as considered in our investment due diligence and
valuation uncertainty analysis.
In preparing the consolidated financial statements, the Group has considered the impact of climate change and in particular the transition
to a lower carbon economy, on the valuation of the Group\u2019s assets and liabilities. In the Strategic report, with additional information in the
Group\u2019s Climate and nature report, we have set out in detail the various risks and opportunities that are created by this transition and how
they may impact the Group across various time horizons. In line with the recommendations of the Task Force on Climate-related Financial
Disclosures, we have further described the resilience of the Group\u2019s strategy, taking into consideration different climate-related scenarios, as
described above. There is no one single scenario that underpins the financial statements. The scenarios help challenge the Group\u2019s perspectives
on the future business and economic environment as a result of the transition to a lower carbon economy, including consideration of events
that may be only remotely possible. As a result, the scenarios covered are not intended to be predictions of likely future events or outcomes
and are not the basis on which the Group\u2019s consolidated financial statements have been prepared.
At the current time, the Group does not consider climate risk to represent a significant area of judgement or of estimation uncertainty.
As at 31 December 2025, no material impacts on the Group\u2019s financial position, nor on the valuation of assets or liabilities on the Group\u2019s
Consolidated Balance Sheet as a result of climate change risk have been identified. In arriving at this determination, the Group has in
particular taken into account the following areas of judgement, which we consider to be those most exposed to the potential impact of
climate change in the preparation of the financial statements:
Going concern and viability
In preparing the consolidated financial statements, the directors are required to assess the Group\u2019s ability to continue as a going concern, by
taking into account all available information related to at least 12 months from the date of their approval. Additionally, the preparation of the
viability statement takes into consideration the Group\u2019s overall business model and strategy, forecast financial strength and resilience and
the liquidity profile over the planning horizon. Climate-related matters have been considered as part of these assessments and have not
been deemed to create material uncertainties as to their conclusions or to require specific disclosure.
Valuation of Level 3 financial investments and investment property
The valuation of unquoted illiquid assets and investment property has been separately identified as an area of significant estimation
uncertainty. The assumptions used in the models underpinning these assets\u2019 valuations, such as cash flows forecasts, discount rates
and multiples, are often unobservable. Due to the need to apply significant judgements, these assumptions can be impacted by transition
risk, with climate-related inputs gaining more traction (e.g. construction methods and materials, EPC ratings, ESG credentials and climate
resilience). This is particularly relevant for the Group\u2019s Private Markets portfolio, including alternative assets. Where possible, the Group\u2019s
assets are valued using standard market pricing sources or appropriately qualified external valuers and therefore reflect current market
sentiments around climate risk. In this respect market and investor expectations have also been evolving, with greater demand towards
net zero-aligned assets and away from traditional carbon-intensive methods, impacting expected investor returns and therefore discount
rates and multiples. Exposure to the risks of climate change is minimised through rigorous assessment of potential investments and active
monitoring of the carbon intensity of the current portfolio. Additionally, investment properties are being reviewed by independent third
parties, where applicable, with regards to potential retrofitting, to help reduce carbon emissions and make them more efficient and
sustainable for the future.
Asset impairment and residual economic life
The carrying value of goodwill, intangible and certain tangible assets on the Consolidated Balance Sheet which are subject to impairment
testing\u00a0could be affected by climate change risk. For example, inventory may become obsolete or restricted, causing selling prices to decline
or\u00a0their costs of completion to increase. If, as a result, the cost of inventories is not recoverable, they would need to be written down to their
net\u00a0realisable value.
Property, plant and equipment, right-of-use assets, goodwill and intangible assets may see their recoverable amount decrease in light of
climate change and significant changes in the environment (including for example changes in regulation) in which the Group operates, where
adverse effects can represent an indication of impairment. The estimation of recoverable amount as \u2018value in use\u2019 requires an assessment of
future expected cash flows based on assumptions potentially affected by climate-related matters, particularly for goodwill and intangible
assets, which\u00a0are subject to a higher degree of judgement. Where assets are subject to amortisation or depreciation, consideration needs
to be given to\u00a0whether climate risk suggests that the residual economic life is shorter than anticipated, which would give rise to increased
charges in the income statement. Due to the nature of the Group\u2019s assets, we do not anticipate any material additional impairments or
increased amortisation and\u00a0depreciation charges to arise from climate change. Risks will continue to be monitored against judgements
and estimates used in the assessment of impairment.
Insurance contract liabilities
The Group\u2019s insurance contracts are valued using discount rates derived from the backing asset portfolios with deductions made to remove
risks\u00a0that are present in the assets but are not relevant to the insurance liability. Climate-related risks could impact on the Group\u2019s exposure
to\u00a0future credit losses which would impact on the appropriate yield deductions in the discount rate calculation and therefore the insurance
contract valuations.
Provisions and contingent liabilities
The recognition, measurement and disclosure of provisions and contingent liabilities is subject to setting assumptions around future
events and the probability of their occurrence. Climate-related matters could affect these elements, for example by requiring recognition
or disclosure of a legal obligation (e.g. levies imposed for failing climate-related targets) or of a constructive obligation (e.g. requirements
to remediate environmental damage caused by the Group\u2019s operations and investment portfolios).
Deferred tax assets
Deferred tax assets are recognised for deductible temporary differences and unused tax losses and credits, to the extent it is probable
that future taxable profit will be available, against which those amounts can be utilised. Climate-related matters could affect the Group\u2019s
estimate of future taxable profits and therefore it may be required to derecognise deferred tax assets previously on the balance sheet.
Share-based payments
The Group\u2019s performance share plans provide a direct and transparent link between executive pay and the delivery of shareholder returns
over the longer term. They are a conditional award of shares subject to a performance period of at least three years. Performance metrics
for the Group\u2019s share plans are now clearly linked to ESG metrics.
Financial instruments
Expected credit losses are required to be recognised on receivables and certain financial investments, representing the counterparty\u2019s
probability\u00a0of default over a certain time horizon. Climate-related matters may affect the Group\u2019s exposure to these losses, for example
by\u00a0negatively affecting the borrower\u2019s ability to meet their obligations, or by affecting assumptions used in the models adopted to estimate
expected credit losses.
(viii) Material accounting policies
Consolidation principles
Subsidiary undertakings
The consolidated financial statements incorporate the assets, liabilities, equity, income, expenses and cash flows of the Company and of its
subsidiary undertakings drawn up to 31 December each year. All intra-group balances, transactions, income and expenses are eliminated in full.
Subsidiaries are those entities (including special purpose entities, mutual funds and unit trusts) over which the Group directly or indirectly
has control (i.e. when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to
affect those returns through its power over the investee) (Note 42).
Business combinations are accounted for by applying the acquisition method of accounting, which requires the Group to record the
identifiable assets and liabilities of the acquired business at fair value on the date of acquisition. The excess of the fair value of acquisition
consideration over\u00a0the recorded value of the assets and liabilities of the acquired entity is recorded on the statement of financial position
as goodwill. Profits or\u00a0losses of subsidiary undertakings sold or acquired during the year are included in the consolidated results up to the
date of disposal or from the\u00a0date of gaining control.
Puttable instruments held by external parties in consolidated investment vehicles, such as unit trusts, are classified as liabilities and appear
as\u00a0Net asset value attributable to unit holders\u2019 in the Consolidated Balance Sheet.
Associates and joint ventures
Associates are entities over which the Group has significant influence but which it does not control. It is presumed that the Group has
significant influence where it has between 20% and 50% of the voting rights in the investee unless indicated otherwise. Joint ventures
are entities where the Group and other parties have joint control over their activities.
The Group has interests in associates and joint ventures (Note 41) which form part of an investment portfolio held through private equity
vehicles, mutual funds, unit trusts and similar entities. In accordance with the choice permitted by IAS 28, \u2018Investments in Associates
and Joint Ventures\u2019, these interests have been classified as fair value through profit or loss and measured at fair value within financial
investments, with changes in fair\u00a0value recognised in the Consolidated Income Statement.
Associates and joint ventures which do not form part of an investment portfolio are initially recognised in the Consolidated Balance Sheet
at\u00a0cost. Goodwill arising on the acquisition of these associates or joint ventures is included within the carrying value of those investments.
Their carrying amount is increased or decreased to reflect the Group\u2019s share of total comprehensive income after the date of the acquisition.
Where the carrying amount of an associate or joint venture is greater than its estimated recoverable amount, which is the higher of the assets
fair value less costs of disposal and value in use, it is written down immediately to its recoverable amount, with an impairment loss
recognised in the Consolidated Income Statement.
Insurance contracts
Long term insurance contracts \u2013 initial measurement
Insurance contracts are contracts which transfer significant insurance risk to the insurer at the inception of the contract. This is the case if
and\u00a0only if, an insured event could cause an insurer to make significant additional payments in any scenario, other than a scenario which
lacks commercial substance. Such contracts remain insurance contracts until all rights and obligations are extinguished or expired.
At inception, the Group separates the following components from an insurance or reinsurance contract and accounts for them as if they
were stand-alone financial instruments:
\u2022 derivatives embedded in the contract whose economic characteristics and risks are not closely related to those of the host contract
and\u00a0whose\u00a0terms would not meet the definition of an insurance or reinsurance contract as a stand-alone instrument
\u2022 distinct investment components, i.e. investment components that are not highly inter-related with the insurance components and for
which contracts with equivalent terms are sold, or could be sold, separately in the same market or the same jurisdiction.
After separating any financial instrument components, the Group separates any promises to transfer to policyholders distinct goods or
services other than insurance coverage and investment services and accounts for them as separate contracts with customers (i.e. not as
insurance contracts).
A good or service is distinct if the policyholder can benefit from it either on its own or with other resources that are readily available to\u00a0
the policyholder. A good or service is not distinct and is accounted for together with the insurance component if the cash flows and risks
associated with the good or service are highly inter-related with the cash flows and risks associated with the insurance component and
the Group\u00a0provides a significant service of integrating the good or service with the insurance component.
Recognition and level of aggregation
An insurance contract is recognised at the earliest of the following:
(a) the beginning of the coverage period
(b) the date when the first payment from a policyholder becomes due
(c) for onerous contracts, when the contract becomes onerous.
The level of aggregation determines the unit of account at which IFRS 17 calculations are performed. This is determined firstly by dividing
the business written into portfolios. Portfolios comprise groups of contracts with similar risks which are managed together. Portfolios are
further divided based on expected profitability at inception into three categories: onerous contracts, contracts with no significant risk of
subsequently becoming onerous and the remainder. IFRS 17 also requires that no group for level of aggregation purposes may contain
contracts issued more than one year apart. The insurance contract disclosures have been aggregated at the level of the major product
lines of the business, annuities and protection. This disaggregation reflects their similar main characteristics and avoids the presentation
of insignificant detail.
All of the Group\u2019s in scope insurance contracts are accounted for under the general measurement model which measures a group of
insurance contracts as the total of:
\u2022 fulfilment cash flows
\u2022 CSM representing the unearned profit the Group will recognise as it provides services under the insurance\u00a0contract.
Fulfilment cash flows
Fulfilment cash flows comprise unbiased and probability-weighted estimates of future cash flows, discounted to present value to reflect the
time value of money and financial risks, plus a risk adjustment for non-financial risk. The Group\u2019s objective in estimating future cash flows is
to determine the expected value, or the probability weighted mean, of the full range of possible outcomes, considering all reasonable and
supportable information available at the reporting date without undue cost or effort. The Group estimates future cash flows considering a
range of scenarios which have commercial substance and give a good representation of possible outcomes. The cash flows from each
scenario are probability-weighted and discounted using current assumptions.
When estimating future cash flows, the Group includes all cash flows that are within the contract boundary. The cash flows include:
\u2022 premiums and related cash flows
\u2022 claims and benefits, including reported claims not yet paid, incurred claims not yet reported and expected future claims
\u2022 investment management costs incurred in the provision of an investment return service or to enhance the benefits of an insurance contract
\u2022 payments to policyholders resulting from embedded surrender value options
\u2022 an allocation of insurance acquisition cash flows attributable to the portfolio to which the contract belongs
\u2022 claims handling costs
\u2022 policy administration and maintenance costs, including recurring commissions that are expected to be paid to intermediaries for future services
\u2022 an allocation of fixed and variable overheads directly attributable to fulfilling insurance contracts
\u2022 transaction-based taxes.
The Group incorporates, in an unbiased way, all reasonable and supportable information available without undue cost or effort about the
amount, timing and uncertainty of those future cash flows. The Group estimates the probabilities and amounts of future payments under
existing contracts based on information obtained, including:
\u2022 information about claims already reported by policyholders
\u2022 other information about the known or estimated characteristics of the insurance contracts
\u2022 historical data about the Group\u2019s own experience, supplemented when necessary, with data from other sources (historical data is adjusted
to\u00a0reflect current conditions)
\u2022 current pricing information, when available.
The measurement of fulfilment cash flows includes insurance acquisition cash flows which are allocated as a portion of premium to profit
or loss (through insurance revenue) over the period of the contract.
Pre-recognition, insurance acquisition cash flow assets are recognised on the balance sheet prior to allocation to new insurance contracts
and are considered for impairment at each reporting date.
Risk adjustment
The risk adjustment for non-financial risk for a group of insurance contracts reflects the compensation that the Group would require for
bearing uncertainty about the amount and timing of the cash flows that arises from non-financial risk after diversification. The Group\u2019s risk
adjustment is calibrated using a Value at Risk (VAR) methodology. In some cases, the compensation for risk on reinsured business is linked
directly to the price paid for reinsurance.
Discounting
The insurance contract fulfilment cash flows are discounted at rates that reflect the characteristics of the insurance contract liabilities.
These\u00a0are\u00a0determined by starting from an appropriate asset portfolio with deductions to remove risks in the assets that are not present
in\u00a0the\u00a0insurance liabilities.
Contractual service margin (CSM)
The Group\u2019s CSM is a component of the asset or liability for the group of insurance contracts that represents the unearned profit the Group
will\u00a0recognise as it provides services in the future. The Group measures the CSM on initial recognition at an amount that, unless the group
of\u00a0contracts is onerous, results in no income or expenses arising from:
\u2022 initial recognition of the fulfilment cash flows
\u2022 any cash flows arising from the contracts in the Group at that date
\u2022 the derecognition at the date of initial recognition of:
\u2013 any asset for insurance acquisition cash flows
\u2013 any other asset or liability previously recognised related to the group of insurance contracts.
Onerous contracts
For groups of contracts assessed as onerous, the Group recognises a loss in profit or loss for the net outflow, resulting in the carrying amount
of\u00a0the liability for the Group being equal to the fulfilment cash flows and the CSM of the Group being zero. A loss component is established
by the\u00a0Group for the liability for remaining coverage for an onerous group, which represents the losses recognised.
Reinsurance contracts \u2013 initial measurement
The initial measurement of reinsurance contracts held follows the same principles as those for insurance contracts issued, with the exception
of\u00a0the following:
\u2022 reinsurance contracts are recognised from the earlier of the following:
\u2013 the beginning of the coverage period
\u2013 the date the entity recognises an onerous group of underlying insurance contracts, if the entity entered into the related reinsurance
contract\u00a0held in the group of reinsurance contracts held at or before that date.
\u2022 measurement of the cash flows includes an allowance on a probability-weighted basis for the effect of any non-performance by the
reinsurers, including the effects of collateral and losses from disputes
\u2022 the Group determines the risk adjustment for non-financial risk so that it represents the amount of risk being transferred to the reinsurer
\u2022 both day one gains and day one losses are not recognised at initial recognition in the statement of financial position but are deferred into
the\u00a0CSM and released to profit or loss as the reinsurer renders services, except for any portion of a day 1 loss that relates to events before
initial\u00a0recognition
\u2022 if the reinsurance contract is recognised prior to a loss-making underlying contract, the reinsurance CSM can be adjusted to offset a portion of
the inception loss (the loss recovery component). This offsets a portion of the loss recognised on inception of the underlying onerous contract.
Long term insurance contracts \u2013 subsequent measurement
The Group measures the carrying amount of a group of insurance contracts at the end of each reporting period as the sum of:
(i) the liability for remaining coverage comprising fulfilment cash flows related to future service allocated to the Group at that date and the
CSM of the Group at that date
(ii) the liability for incurred claims for the Group reflecting the fulfilment cash flows related to past service allocated to the Group at that date.
Contractual service margin \u2013 measurement
The CSM at the end of the reporting period represents the profit in the group of insurance contracts that has not yet been recognised
in profit or loss, because it relates to future service to be provided.
For a group of insurance contracts the carrying amount of the CSM of that group at the end of the reporting period equals the carrying
amount at\u00a0the beginning of the reporting period adjusted for:
\u2022 the effect of any new contracts added
\u2022 interest accreted on the carrying amount of the CSM during the reporting period, measured at the discount rates at initial recognition
\u2022 changes in fulfilment cash flows relating to future service, except to the extent that:
\u2013 such increases in the fulfilment cash flows exceed the current carrying amount of the CSM, giving rise to a loss; or
\u2013 such decreases in the fulfilment cash flows are allocated to the loss component of the liability for remaining coverage
\u2022 the amount recognised as insurance revenue because of the transfer of services in the period, determined by allocation of the CSM
at the end of the period over the current and remaining coverage period
\u2022 the effect of any currency exchange differences on the CSM.
The changes in fulfilment cash flows relating to future service that adjust the CSM comprise:
\u2022 experience adjustments that arise from the difference between the premium receipts (net of refunds) and any related cash flows such as
insurance acquisition cash flows and insurance premium taxes and the estimate, at the beginning of the period, of the amounts expected.
Differences related to premiums received (or due) in respect of current or past services are recognised immediately in profit or loss while
differences related to premiums received (or due) for future services are adjusted in the CSM
\u2022 changes in estimates of the present value of future cash flows in the liability for remaining coverage, except those relating to the time value
of\u00a0money and changes in financial risk (which are instead recognised in the statement of profit or loss and other comprehensive income)
\u2022 differences between any investment component expected to become payable in the period and the actual investment component that
becomes payable in the period
\u2022 changes in the risk adjustment for non-financial risk that relate to future service.
Adjustments to the CSM noted above are measured at discount rates that reflect the characteristics of the cash flows of the group of
insurance contracts at initial recognition (i.e. the weighted average of the rates applicable at the date of initial recognition of contracts
that joined a group over a 12-month period).
Onerous contracts
Groups of contracts that were not onerous at initial recognition can subsequently become onerous if assumptions and experience extinguish
the CSM. In this case, the Group establishes a loss component for the future losses recognised. The loss component is released based on
a systematic allocation of the subsequent changes in the fulfilment cash flows to: (i) the loss component; and (ii) the liability for remaining
coverage excluding the loss component. The loss component is also updated for subsequent changes in estimates of the fulfilment cash
flows related to future service. The systematic allocation of subsequent changes to the loss component results in the total amounts allocated
to the loss component being equal to zero by the end of the coverage period of a group of contracts (since the loss component will have
materialised in the form of incurred claims). The loss component ensures that over the duration of the contract, the correct amounts are
recognised as insurance revenue and insurance service expenses.
Contractual service margin (CSM) \u2013 recognition
The amount of CSM recognised in the income statement for a group of insurance contracts reflects the insurance contract services provided.
The proportion of the CSM earned is calculated as the amount of coverage units provided in the period divided by the sum of\u00a0all\u00a0the future and
current period coverage units. The Group has elected to discount the future coverage units in this calculation. The table below\u00a0indicates the main
insurance contracts services provided under the Group\u2019s insurance contracts and selected coverage unit(s) used to\u00a0measure those services.
Insurance contract
Insurance service
Coverage unit(s)
Immediate annuity
Payment of insurance claims
Expected annual claims payments
Deferred annuity
Payment of insurance claims (payment phase)
Investment return service (deferral phase)
Lump sum death benefits (deferral phase)
Expected annual claims payments
Expected investment return on backing assets
Sum assured
Longevity swaps
Payment of floating leg of swap
Expected annual floating leg payments
Retail Protection
Potential mortality or morbidity claims
Sum assured
Group Protection
Potential mortality or morbidity claims
Sum assured
Where a specific unit of account contains a mixture of services and therefore coverage units, it is necessary to weight the coverage units so
that the resulting profile of CSM release reflects the overall package of benefits provided. This is particularly pertinent to units of account
incorporating a combination of immediate and deferred annuities. Under IFRS 17, deferred annuities usually provide multiple services, split
between the two phases of benefit provision (the deferral phase and the payment phase). Judgement is therefore required to combine the
different coverage units so that they fairly reflect the services provided. The weighting between the deferral phase and the payment phase
coverage units is calculated so that the services provided in the deferral phase reflect the investment return provided and the probability
weighted delivery of any lump sum death benefits, both adjusted so that all of the CSM is earned in the deferral phase for all contracts
which do not enter the payment phase either through transfer out, withdrawal of funds or death.
Investment components
The Group identifies the investment component of a contract by determining the amount that it would be required to repay to the policyholder
in all scenarios with commercial substance. Investment components are not included in insurance revenue and insurance service expenses.
Insurance finance income and expense
Insurance finance income and expenses comprise changes in the carrying amounts of groups of insurance contracts arising from the effects
of the time value of money, financial risk and changes therein. IFRS 17 requires an accounting policy decision as to whether to recognise all
finance income or expense in profit or loss, or whether to disaggregate the income or expense that relates to changes in financial assumptions into
other comprehensive income. Finance income and expense has been included in profit or loss for all insurance products except for the
Group\u2019s protection business where it has been disaggregated between profit and loss and other comprehensive income. Where insurance
finance income and expense has been disaggregated the amount included in profit or loss is determined by a systematic allocation of the
expected total insurance finance income or expenses over the duration of the group of contracts, using the discount rates determined on
initial recognition.
Changes in the risk adjustment for non-financial risk have been disaggregated between insurance service result and insurance finance
income and expenses.
Reinsurance contracts held \u2013 subsequent measurement
The subsequent measurement of reinsurance contracts held follows the same principles as those for insurance contracts issued except that
changes in the fulfilment cash flows are recognised in profit or loss if the related changes arising from the underlying ceded contracts are
recognised in profit or loss.
Derecognition and contract modification of insurance contracts
The Group derecognises a contract when it is extinguished, i.e. when the specified obligations in the contract expire or are discharged
or cancelled.
The Group also derecognises a contract if its terms are modified in a way that would have changed the accounting for the contract
significantly had the new terms always existed, in which case a new contract based on the modified terms is recognised. If a contract
modification does not\u00a0result in derecognition, then the Group treats the changes in cash flows caused by the modification as changes
in estimates of fulfilment cash\u00a0flows.
Measurement on transition to IFRS 17
On transition to IFRS 17, the insurance contract liabilities were restated, retrospectively applying the Group\u2019s accounting policies. In line with
the provisions available in IFRS 17, the Group applied the full retrospective approach unless impracticable. The full retrospective approach
required the Group to:
\u2022 identify, recognise and measure each group of insurance and reinsurance contracts as if IFRS 17 had always applied
\u2022 derecognise any existing balances that would not exist had IFRS 17 always applied
\u2022 recognise any resulting net difference in equity.
If it was impracticable to apply a full retrospective approach to a group of contracts then the Group selected an approach between the
modified retrospective approach and the fair value approach. If the Group could not obtain reasonable and supportable information
necessary to apply the\u00a0modified retrospective approach, then the fair value approach was selected.
Full retrospective approach
For insurance and reinsurance contracts where the full retrospective approach was adopted, the best estimate and risk adjustment components
of fulfilment cash flows were recognised and measured using the Group\u2019s accounting policies from the inception date of the contracts to the
date of transition. The full retrospective approach was determined to be impracticable where: the effects of retrospective application were not
determinable because information required was not collected (or not with sufficient granularity);`application would require the application of
hindsight; or information was unavailable because of system migrations, data retention requirements or other reasons.
Modified retrospective approach
The objective of the modified retrospective approach is to achieve the closest outcome to retrospective application possible using reasonable
and\u00a0supportable information available without undue cost or effort. For insurance and reinsurance contracts where the modified retrospective
approach has been adopted, the best estimate and risk adjustment components of fulfilment cash flows were recognised and measured
using the Group\u2019s accounting policies at the date of transition except for the application of a permitted transition modification that, for some
groups of contracts issued before 1 January 2021, the risk adjustment for non-financial risk on initial recognition was determined by adjusting
the amount at\u00a01 January 2022 for the expected release of risk before that date. The expected release was determined with reference to the
release of risk of similar contracts that the Group issued in 2022. This modification was used to avoid the application of hindsight to the
calibration of the risk adjustment in prior periods.
Fair value approach
For insurance and reinsurance contracts where the fair value approach has been adopted, the best estimate and risk adjustment components
of\u00a0fulfilment cash flows were determined as at 1 January 2022. The Group determined the contractual service margin (CSM) of the liability
for remaining coverage at the transition date, as the difference between the fair value of the group of insurance contracts and the fulfilment
cash flows measured at that date. In determining fair value, the Group applied the requirements of IFRS 13, \u2018Fair Value Measurement\u2019, except
for the demand deposit floor requirement.
Financial instruments
Recognition and derecognition
Initial recognition of financial assets and liabilities is on the trade date, which is the date on which the Group becomes a party to the
contractual provisions of the instrument. A financial asset or financial liability is initially measured at fair value plus, for a financial asset or
financial liability not\u00a0measured at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issue.
When the fair value of\u00a0financial assets and liabilities differs from the transaction price on initial recognition, the Group recognises the
difference as follows:
\u2022 when the fair value is evidenced by a quoted price in an active market for an identical asset or liability (i.e. a Level 1 input) or based
on\u00a0a\u00a0valuation technique that uses only data from observable markets, the difference is recognised as a gain or loss
\u2022 in all other cases, the difference is deferred and the timing of recognition of deferred day one profit or loss is determined individually.
It is either amortised over the life of the instrument, deferred until the instrument\u2019s fair value can be determined using market observable
inputs or realised through settlement.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when the Group transfers
substantially all the risks and rewards of ownership to another entity. This is the case for cash collateral pledged, where the counterparty
has contractual rights to receive the cash flows generated and which is derecognised from the Consolidated Balance Sheet and a
corresponding receivable recognised for its return.
The Group enters into transactions whereby it transfers assets recognised in its Consolidated Balance Sheet, but retains either all or
substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognised. Examples
of such transactions are repurchase agreements and non-cash collateral pledged, unless the Group defaults on its obligations under the
relevant agreement.
In transactions in which the Group neither retains nor transfers substantially all of the risks and rewards of ownership of a financial asset
and it retains control over the asset, the Group continues to recognise the asset to the extent of its continuing involvement, determined
by the extent to\u00a0which it is exposed to changes in the value of the transferred asset.
The Group derecognises a financial liability when its contractual obligations expire or are discharged or cancelled. The Group also
derecognises a\u00a0financial liability when its terms are modified and the cash flows of the modified liability are substantially different,
in which case a new financial liability based on the modified terms is recognised at fair value.
On derecognition of a financial asset or financial liability, the difference between the carrying amount at the date of derecognition and the
consideration received (including any new asset obtained less any new liability assumed) is recognised in profit or loss.
Modification
If the terms of a financial asset are modified, then the Group evaluates whether the cash flows of the modified asset are substantially
different. If\u00a0the cash flows are substantially different, then the contractual rights to cash flows from the original financial asset are deemed
to have expired. In this case, the original financial asset is derecognised and a new financial asset is recognised at fair value plus any eligible
transaction costs.
Classification and measurement of financial assets
The Group classifies its financial assets on initial recognition as measured at amortised cost, fair value through other comprehensive income
(FVOCI) and fair value through profit or loss (FVTPL).
The classification and measurement of financial assets depends on their contractual cash flow characteristics and how they are managed
(the entity\u2019s business model). The contractual cash flow characteristics test aims to identify those assets with cash flows consistent with a
basic lending arrangement, i.e. which are \u2018solely payments of principal and interest\u2019 (SPPI). The business model test refers to how an entity
manages its financial assets with the objectives of generating cash flows. These factors determine whether the financial assets are measured
at amortised cost, FVOCI or FVTPL. Assets are therefore typically characterised as follows:
\u2022 amortised cost: financial assets with contractual terms that give rise solely to interest and principal cash flows and which are held in a
business model whose objective is to hold the assets to collect their cash flows. They are measured at amortised cost using the effective
interest method. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on
derecognition is also recognised in profit or loss
\u2022 FVOCI: financial assets with contractual terms that give rise solely to interest and principal cash flows and which are held in a business
model whose objective is achieved by holding the assets to collect their cash flows and selling them. Interest income calculated using the
effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses
are recognised in other comprehensive income. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss
\u2022 FVTPL: all other financial assets. Net gains and losses, including any interest or dividend income and foreign exchange gains and losses,
are\u00a0recognised in profit or loss, unless they arise from derivatives designated as hedging instruments in cash flow or net investment hedges.
Notwithstanding the above, on initial recognition the Group may irrevocably designate to FVTPL a financial asset that would otherwise be
measured at amortised cost or FVOCI if doing so eliminates or greatly reduces an accounting mismatch.
In making the SPPI assessment, the Group considers whether the contractual cash flows are consistent with a basic lending arrangement (that
is, interest includes only consideration for the time value of money, credit risk, other basic lending risks and a profit margin that is consistent with
a basic lending arrangement). This includes evaluating whether the financial asset contains a contractual term that could change the timing or
amount of contractual cash flows such that it would not meet this condition. Examples of such contractual terms to be considered are contingent
events that would change the amount or timing of cash flows, leverage features, prepayment and extension features, non-recourse asset
arrangements and features that modify consideration for the time value of money (e.g. periodic reset of interest rates).
The business model reflects how the Group manages assets in order to generate cash flows, i.e. it reflects whether the Group\u2019s objective
is solely to collect the contractual cash flows from assets or to collect both the contractual cash flows and cash flows arising from the sale
of assets. If neither of these is applicable (for example, financial assets are held for trading purposes), the business model is \u2018other\u2019 and the
financial asset is measured at FVTPL. Factors considered by the Group in determining the business model for a group of assets include past
experience on how the cash flows for these assets were collected, how the asset\u2019s performance is evaluated and reported to key
management personnel, how risks are assessed and managed and how managers are compensated.
The objective of the Group\u2019s business model for certain debt instruments, in particular those instruments backing annuity or investment
contract liabilities, including surplus assets, is to fund its liabilities. Consistent with the Group\u2019s investment strategy their performance is
evaluated on a total return basis, as significant buying and selling activity is undertaken on a regular basis to rebalance its portfolio and
to ensure that contractual cash flows from those assets are sufficient to settle the underlying liabilities. These investments do not follow a
\u2018held to collect\u2019 or \u2018held to collect and sell\u2019 business model and are therefore accounted for at FVTPL. This business model is also applicable
to reverse repurchase agreements and to derivatives. Equity instruments are accounted for at FVTPL.
Certain debt securities are held in separate portfolios for long-term yield. These include long-dated debt instruments backing annuities
liabilities, but in surplus to the IFRS 17 best estimate liability and risk adjustment, used to manage interest and inflation rate exposure, as
well as assets backing protection liabilities. These assets represent instruments consistent with the SPPI principles and are accounted for
at amortised cost or\u00a0FVOCI depending on the expected level of trading.
Receivables are accounted for at amortised cost.
Classification and measurement of financial liabilities
The Group classifies and subsequently measures financial liabilities at amortised cost or FVTPL.
Investment contract liabilities
Investment contract liabilities are measured at FVTPL. This is because these liabilities, as well as the related assets, are managed and their
performance evaluated on a fair value basis. For unit linked liabilities, fair value is determined by reference to the value of the underlying net
asset values of the Group\u2019s unitised investment funds at the balance sheet date.
Core and operational borrowings
Borrowings are recognised initially at fair value, net of transaction costs. Borrowings are subsequently stated at amortised cost. The
difference between the net proceeds and the redemption value is recognised in the income statement over the borrowing period using
the effective interest rate method.
Other financial liabilities
Other financial liabilities include derivative liabilities, repurchase agreements and trail commission, which are measured at FVTPL, while
other payable balances are measured at amortised cost.
Derivatives
Derivatives are initially recognised at fair value on the date on which the derivative contract is entered into. The Group\u2019s derivatives, other
than those designated as hedging instruments in cash flow or net investment hedges, are instruments held for trading and, are therefore
accounted for\u00a0at FVTPL.
Derivatives may be embedded in another contractual arrangement. If such a hybrid contract contains a host that is a financial asset, the
Group assesses the entire contract for classification and measurement purposes. Otherwise, the Group accounts for an embedded derivative
separately from the host contract when:
\u2022 its economic characteristics and risks are not closely related to those of the host contract
\u2022 the terms of the embedded derivative would have met the definition of a derivative if they were contained in a separate contract
\u2022 the hybrid contract is not measured at FVTPL.
These embedded derivatives are separately accounted for at FVTPL, unless the Group chooses to designate the entire hybrid contract at FVTPL.
A derivative embedded in a host insurance or reinsurance contract is not accounted for separately from the host contract if the embedded
derivative itself meets the definition of an insurance or reinsurance contract.
Collateral
Collateral received in the form of cash, which is not legally segregated from the Group, is recognised as an asset in the Consolidated Balance
Sheet with a corresponding liability for the repayment in Payables and other financial liabilities. However, where the Group has a currently
enforceable legal right of set-off and the ability and intent to net settle, the collateral liability and associated derivative balances are shown net.
Non-cash collateral received is not recognised in the Consolidated Balance Sheet unless the transfer of the collateral meets the derecognition
criteria from the perspective of the transferor. Such collateral is typically recognised when the Group either: (a) sells or repledges these assets
in the absence of default, at which point the obligation to return this collateral is recognised as a liability; or (b) the counterparty to the
arrangement defaults, at which point the collateral is seized and recognised as an asset.
Collateral pledged in the form of cash, which is legally segregated from the Group, is derecognised from the statement of financial position
with a\u00a0corresponding receivable recognised for its return. Non-cash collateral pledged is not derecognised from the statement of financial
position unless the Group defaults on its obligations under the relevant agreement and therefore continues to be recognised in the
Consolidated Balance Sheet within Financial investments.
Impairment of financial assets
The Group assesses on a forward-looking basis the expected credit loss (ECL) associated with its financial assets measured at amortised
cost and FVOCI and recognises a loss allowance for such losses at each reporting date. Expected credit losses are defined as the present
value of the difference between all contractual cash flows that are due and all cash flows that the entity expects to receive (i.e. the cash
shortfall), weighted based on their probability of occurrence. The loss allowance recognised under IFRS 9 can be equal to an amount
corresponding to a 12-month ECL or a lifetime ECL. A lifetime ECL is the ECL resulting from all possible default events over the expected
life of the financial asset; a 12-month ECL is the portion of lifetime ECL resulting from default events on a financial asset that are possible
within the 12 months after the reporting date. For a financial asset that is credit-impaired at the reporting date, but that is not a purchased or
originated credit-impaired financial asset, expected credit losses are measured as the difference between the asset\u2019s gross carrying amount
and the present value of estimated future cash flows, discounted at the financial asset\u2019s original effective interest rate. Any adjustment is
recognised in profit or loss as an impairment gain or loss.
The Group defines default on a financial asset as the inability to meet in full and on time an original promise of expected cash flows,
the amount and timing of which are defined with certainty. Any breach of this promise, by any amount or time (in excess of any potential
planned grace period), constitutes a default. This is consistent with the definition of default used for internal credit risk management
purposes. An asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of
that financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable data:
\u2022 significant financial difficulty of the borrower
\u2022 a breach of contract, such as a default or past due event
\u2022 the restructure of a loan by the Group on terms which it would not otherwise consider
\u2022 it becomes probable that the borrower will enter bankruptcy or other financial reorganisation.
A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.
The ECL model is run from the date of initial recognition of a financial asset and its output updated at every reporting period, even if no actual
loss events have taken place. The impact of updating the inputs of the ECL model in the reporting period is recognised in profit or loss directly
where it affects the carrying value of financial assets at amortised cost, while for assets at FVOCI an equal and opposite movement is
recorded in other comprehensive income.
In order to determine whether the Group measures ECLs at an amount equal to 12-month ECL or lifetime ECL, at each reporting period
the Group is required to assess which \u2018stage\u2019 a financial asset falls into. Stages reflect the general pattern of deterioration in credit risk
of a financial instrument that ultimately defaults, as follows:
\u2022 Stage 1 includes financially healthy financial assets that are expected to perform in line with their contractual terms and which have
no signs of\u00a0increased credit risk
\u2022 Stage 2 includes financial assets for which a significant increase in credit risk has occurred since initial recognition, but which are not
credit-impaired
\u2022 Stage 3 applies to credit-impaired financial instruments.
When financial assets are under Stage 1, 12-month ECLs are recognised. When financial assets are under Stage 2 or 3, lifetime ECLs are
recognised. An instrument moves down (or up) the stages when a significant increase in credit risk (SICR) has happened (or has reversed).
When determining whether the credit risk of a financial instrument has increased significantly since initial recognition, the Group considers
reasonable and supportable information, both qualitative and quantitative, that is relevant and is available without undue cost or effort,
including forward-looking information at its disposal. Key indicators used in order to determine whether a SICR has occurred (either in
isolation or in combination) are:
\u2022 deterioration in rating grade between origination date and reporting date. The level of deterioration required by an individual asset is
determined using a relative rating matrix
\u2022 exposure is identified on the investment managers\u2019 \u2018watchlist\u2019
\u2022 exposure is identified on internal \u2018credit watchlists\u2019
\u2022 a manual shift of an exposure to Stage 2 on an exceptional basis (where required, using management judgement).
The provisions of IFRS 9 include a rebuttable presumption that the credit risk on a financial asset has increased significantly since initial
recognition when contractual payments are more than 30 days past due, which is taken into account for this assessment.
The Group makes use of a practical expedient available in IFRS 9 whereby it can be assumed that the credit risk on a financial instrument
has\u00a0not\u00a0increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date
(e.g.\u00a0investment grade as determined by the Group\u2019s asset managers). This allows recognition of 12-month ECLs as opposed to, potentially,
lifetime ECLs. This is deemed to be the case where assets that have been downgraded remain of good credit quality (i.e. investment grade
as\u00a0determined by the Group\u2019s asset managers) as at the reporting date, to the extent that, where relevant, the Group\u2019s internal credit risk
ratings are considered to be consistent with a globally understood definition of \u2018low credit risk\u2019.
The Group estimates ECLs on its financial investments at amortised cost and debt instruments at FVOCI which are not credit-impaired
by using the probability of default approach. Based on this method, the ECLs are a probability-weighted estimate of the present value of
estimated cash shortfalls, i.e. the weighted average of credit losses, with the respective risks of a default occurring used as the weightings.
For this purpose, the key elements to be calculated are the Probability of Default (PD), i.e. the estimate of the likelihood of default over a
given time horizon (either 12 months or lifetime); the respective Loss Given Default (LGD); and the Exposure at Default (EAD).
Exposures that move into Stage 3 are able to transition back to Stage 2 if the asset no longer meets the definition of default. Similarly,
exposures will re-transition from Stage 2 to Stage 1 where the SICR indicators no longer apply. No separate cure or probation periods are
applied on the basis that assets will not be re-rated or moved out of default until there is evidence of stable and improved performance.
In order to determine 12-month or lifetime PDs the Group\u2019s models utilise historical data obtained from S&P and Moody\u2019s in order to
evaluate transitions (i.e. the probability that a security changes rating in a given year) and defaults, plus scenario-specific annual scaling
factors which adjust the PDs for forward-looking information. The final PDs produced by the model are unconditional, i.e. they incorporate
both the probability of not defaulting until the start of the period and the subsequent probability of default in that period, conditional on the
position not having defaulted to that point. This allows them to be summed over 12 months to provide 12-month PD estimates, or over all
remaining months to produce lifetime PD estimates.
LGD is the magnitude of the likely loss if there is a default, based on the history of recovery rates of claims against defaulted counterparties
and taking into account collateral values where applicable.
EAD represents the expected exposure in the event of a default. The Group estimates LGD based on the history of recovery rates of claims
against defaulted counterparties. Appropriate haircuts are applied to baseline unsecured LGDs and used in conjunction with forecast
collateral values to estimate LGD for assets secured by collateral.
The Group has adopted a simplified approach for trade receivables, contract assets and finance and operating lease receivables. This allows
measurement of lifetime ECLs only, thereby removing the need to identify SICRs. For these balances, the Group makes use of provision
matrices in order to calculate such lifetime ECLs. This is a practical expedient allowed by IFRS 9 whereby historical credit loss experience
and fixed loss rates are applied to the balances outstanding. Historical loss rates are adjusted to allow for forward-looking information.
Hedge accounting
The Group uses hedge accounting, provided the prescribed criteria are met, to recognise the offsetting effects of changes in the fair value
or cash flow of the derivative instrument and the hedged item. Hedge accounting can be applied in order to:
\u2022 hedge the exposure to fair value movements of a recognised asset or liability or an unrecognised firm commitment, or a component
of any such item, that is attributable to a particular risk and could affect the Consolidated Income Statement
\u2022 hedge the exposure to variability in cash flows attributable to a particular risk associated with all, or a component of, a recognised asset
or liability, or a highly probable forecast transaction, that could affect the Consolidated Income Statement
\u2022 hedge the exposure to the currency risk associated with a net investment in a foreign operation.
The relationship between the hedging instrument and the hedged item, together with the risk management objective and strategy for
undertaking the hedge transaction, are documented formally at the inception of the transaction. The documentation includes identification of
the hedging instrument, the hedged item, the nature of the risk being hedged and how the Group will assess whether the hedging relationship
meets the hedge effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the hedge ratio is determined).
A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements:
\u2022 there is an economic relationship between the hedged item and the hedging instrument
\u2022 the effect of credit risk does not dominate the value changes that result from that economic relationship
\u2022 the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually
hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
The effective portion of the gain or loss on the hedging items is recognised in the Consolidated Statement of Comprehensive Income and
in a separate reserve within equity (cash flow hedge). The gain or loss relating to the ineffective portion is recognised immediately in the
Consolidated Income Statement. Amounts accumulated in equity are reclassified in the periods when the hedged item affects profit or loss.
The change in fair value of the hedging instrument related to the basis spread or forward points movements is recognised in a separate
component of equity (cost of hedging reserve) to the extent that it relates to the hedged item (cost of hedging reserve) and expensed on
a systematic and rational basis over the period of the hedge relationship.
Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date.
Fair value measurements are based on observable and unobservable inputs. Observable inputs reflect market data obtained from
independent sources, while unobservable inputs reflect the Group\u2019s view of market assumptions in the absence of observable market
information. The Group utilises techniques that maximise the use of observable inputs and minimise the use of unobservable inputs.
The best evidence of the fair value of a financial instrument at initial recognition is normally the transaction price. In certain circumstances,
the fair value at initial recognition differs from the transaction price. If the fair value is evidenced by comparison by a quoted price in an active
market for an identical instrument, or is based on a valuation technique that uses only data from observable markets, the difference between
the fair value at initial recognition and the transaction price is recognised as a gain or loss in the Consolidated Income Statement. In all other
cases, the difference between the fair value at initial recognition and the transaction price is deferred and recognised in the Consolidated
Income Statement over the life of the instrument to the extent that it arises from a change in a factor (including time) that market participants
would take into account when pricing the instrument.
Revenue
Insurance revenue
The Group\u2019s insurance revenue depicts the provision of services arising from a group of insurance contracts, reflecting the consideration
the Group expects to be entitled to in exchange for those services. Insurance revenue from a group of insurance contracts is therefore the
relevant portion for the period of the total consideration for the contracts, (i.e. the amount of premiums paid to the Group adjusted for
financing effect (the\u00a0time value of money) and excluding any investment components).
The total consideration for a group of contracts covers amounts related to the provision of services and comprises:
\u2022 the release of the CSM
\u2022 changes in the risk adjustment for non-financial risk relating to current service
\u2022 claims and other insurance service expenses expected at the beginning of the period
\u2022 experience adjustments arising from premiums received in the period other than those that relate to future service
\u2022 insurance acquisition cost recovery determined by allocating the portion of premiums related to the recovery of those costs on the basis
of\u00a0insurance coverage provided
\u2022 other amounts, including any other pre-recognition cash flow assets derecognised at the date of initial recognition.
Fees from fund management and investment contracts
The Group generates revenue from acting as the investment manager for clients. Fees charged on investment management services are
based on the contractual fee arrangements applied to assets under management and recognised as revenue as the services are provided.
The Group\u2019s income from investment contracts is primarily derived from fees for administration and managing of funds in pension plans.
Revenue generated on investment contracts is recognised as services are provided. No significant judgements are applied on the timing or
transaction price. In the instances of performance fees where revenue is subject to meeting a certain performance threshold, such revenue is
not recognised until the condition has been met and it is highly probable that no significant reversal of amounts would occur. Variable costs
directly related to\u00a0securing new contracts are capitalised and amortised over the estimated period over which the revenue is earned.
Transaction fees are charged to implement trades for clients. Such fees are charged at the time the transaction takes place and are based
on\u00a0the\u00a0size of the underlying contract.
Other operational income from contracts with customers
House building
House building revenue arises from the sale of residential properties and land and is recognised net of discounts and sales incentives.
It also includes sale proceeds of part exchange properties. Sales of private houses are recognised on legal completion. Sales of social
housing, where multiple units are developed and sold under a contractual agreement with a single customer, typically a housing association,
are recognised over time in accordance with construction progress. Sales of land and commercial property are recognised on unconditional
exchange, namely when contracts are exchanged or missives concluded and, where appropriate, construction is complete. The transaction
price is determined using extensive research and expert judgement, current market values and regional variations.
Warranties are provided on all properties and range from 2-10 years. Due to their features, these do not represent separate performance obligations.
Professional services fees
The Group\u2019s professional services fees revenue arises from professional services provided by employed surveyors and third-party providers,
panel\u00a0management fees and administration fees. These fees are based on fee scales or contracts. Revenue is recognised when the service
has\u00a0been rendered.
In addition, the Group derives professional fees from facilitation of mortgage arrangements and related products such as conveyancing. These are
based on an agreement/contract and could be tiered based on volume. The obligation in such instances is satisfied on completion of the mortgage/
service, at which point the revenue is recognised. There is no significant judgement applied on the timing or amount of fee recognised.
Insurance broker fees
Fees are charged on each performance obligation offered to the customer as per agreed structure. Revenue for placement services is
recognised at the point in time when the intermediary has satisfied its performance obligation, that is when the terms of the insurance
policy have been agreed contractually by the insurer and policyholder and the insurer has a present right to payment from the policyholder.
No significant judgements are applied on the timing or transaction price.
Investment return
Investment return includes unrealised fair value gains and losses on financial investments at fair value through profit or loss, realised gains
and\u00a0losses, dividends, rent and interest. Dividends are accrued on an ex-dividend basis. Interest income is recognised as it accrues, taking into
account the effective yield on the investment. Rental income is recognised on an accruals basis and is generally recognised on a straight line
basis unless there is compelling evidence that benefits do not accrue evenly over the period of the lease. Interest income for financial assets
which are not classified as fair value through profit or loss (FVTPL) is recognised using the effective interest method.
A gain or loss on a financial investment is only realised on disposal or transfer and is the difference between the proceeds received, net
of transactions cost and its original cost or amortised cost, as appropriate. Realised gains or losses on investment property represent the
difference between the net disposal proceeds and the carrying value of the property.
Unrealised gains and losses represent the difference between the carrying value at the end of the year and the carrying value at the previous
year end or purchase value during the year, less the reversal of previously unrealised gains and losses in respect of disposals made during
the year.
Insurance service expenses
Insurance service expenses arising from insurance contracts are recognised in profit or loss as they are incurred. They exclude repayments
of investment components and comprise the following items:
\u2022 incurred claims and benefits, excluding investment components reduced by loss component allocations
\u2022 incurred directly attributable expenses
\u2022 insurance acquisition cost amortisation
\u2022 insurance acquisition cost asset impairment.
Dividends
Interim dividends on ordinary shares are deducted from retained earnings in the period in which they are paid. Final dividends on ordinary
shares are recognised as a liability in the period in which they have been approved by shareholders of the Company.
Earnings per share
Earnings per share is a measure of the portion of the Group\u2019s profit allocated to each outstanding share. It is calculated by dividing net
income attributable to ordinary equity holders by the weighted average number of ordinary shares in issue during the year, excluding
employee scheme treasury shares. For this purpose, net income is defined as the profit after tax, attributable to equity holders of the
Company, derived from continuing operations.
For diluted earnings per share, the weighted average number of ordinary shares in issue, excluding employee scheme treasury shares, is
adjusted to assume conversion of all dilutive potential ordinary shares, such as share options granted to employees. Potential or contingent
share issuances are treated as dilutive when their conversion to shares would decrease net earnings per share.
Intangible assets
Intangible assets mainly consist of capitalised software costs.
Where software costs are separately identifiable and measurable, they are capitalised at cost and amortised over their expected useful life
on a straight-line basis. Costs incurred to internally develop software are only capitalised if the expenditure can be measured reliably, the
product or process is technically and commercially feasible, future economic benefits are probable and the Group intends to and has
sufficient resources to\u00a0complete such development and to use or sell the asset. Otherwise, such costs are recognised in profit or loss as
incurred. The estimated amortisation period for IT development costs and software is between 3 and 10 years.
Intangible assets acquired via business combinations are recognised at fair value and are subsequently amortised on a straight-line basis
over their estimated useful life.
Amortisation methods, useful lives and any expected residual values are reviewed at each reporting date and adjusted if appropriate.
Intangible assets are tested for impairment either individually or at the cash-generating unit level. Intangible assets with indefinite useful
lives and intangible assets not yet available for use are tested for impairment at least annually, or whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. Intangible assets with finite useful lives are tested when there are indications
of impairment. The recoverable amount is the higher of an asset\u2019s fair value less costs to sell and its value in use.
Investment property
Investment property comprises land and buildings which are held for long-term rental yields and capital growth, as well as right-of-use
assets of the same nature and are not occupied by the Group. Completed investment property is carried at fair value with changes in fair
value recognised in the Consolidated Income Statement within Investment return. Investment properties under construction are included
within Property, plant and equipment and are stated at cost less any impairment until construction is completed or fair value becomes
reliably measurable.
Non-current assets held for sale
Assets and liabilities part of a disposal group classified as held for sale are shown separately in the Consolidated Balance Sheet. They are
recorded at the lower of their carrying amount and their fair value less costs to sell.
Discontinued operations
Discontinued operations comprise those activities that were disposed of or classified as held for sale at the end of the period and represent
a separate major line of business or geographical area that can clearly be distinguished for operational and financial reporting purposes.
The results of discontinued operations are presented separately in the Consolidated Income Statement and Consolidated Statement of
Comprehensive Income. Comparatives are re-presented where applicable.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, treasury bills and other short-term highly liquid
investments with maturities of three months or less from the date of acquisition.
Property, plant and equipment
Property, plant and equipment includes tangible assets owned by the Group (such as land and office and other buildings) or held under lease
arrangements (such as office buildings, IT equipment and vehicles). Property, plant and equipment includes owner occupied property held by a
fund, the units of which determine benefits for its investors. In accordance with IAS 16, \u2018Property, Plant and Equipment\u2019, the Group has elected
to measure this asset at fair value, with changes in fair value recognised in the Consolidated Income Statement within Investment return.
All other assets within Property, plant and equipment are carried at historical cost less accumulated depreciation, calculated on a straight-
line basis over their estimated useful life. Amortisation methods, useful lives and any expected residual values are reviewed at each
reporting date and\u00a0adjusted if appropriate.
An impairment review of Property, plant and equipment not carried at fair value is performed whenever events or changes in circumstances
indicate that their carrying amount may not be recoverable. Where the carrying amount of an asset is greater than its estimated recoverable
amount, which is the higher of the assets fair value less costs of disposal and value in use, it is written down immediately to its recoverable
amount, with an impairment loss recognised in the Consolidated Income Statement.
Leases
Lessee
Where the Group is a lessee, it recognises leases on the Consolidated Balance Sheet as \u2018right-of-use\u2019 assets and lease liabilities.
The right-of-use assets\u2019 value is initially recognised as the calculated value of the lease liabilities, initial direct costs and incentives received.
The right-of-use assets are subsequently accounted for in accordance with the cost model in IAS 16, \u2018Property, Plant and Equipment\u2019 or as
investment property under IAS 40, \u2018Investment Property\u2019. The Group also assesses right-of-use assets classified as Property, plant and
equipment for impairment when such indicators exist.
The initial measurement of the lease liabilities is made up of the present value of lease payments to be made over the lease term, including
fixed lease payments and excluding lease incentive receivables. The Group uses the incremental borrowing rate as a discount rate for
calculating the lease liabilities. The lease liabilities are unwound over the term of the lease giving rise to an interest expense. Additionally,
the liabilities are reduced when lease payments are made. The Group reassesses the carrying amount of lease liabilities and right-of-use
assets if certain events occur that modify the original assumptions used to calculate the lease balances upon initial recognition.
The Group leases offices, vehicles, IT equipment and investment properties under non-cancellable operating lease agreements. The
Group has elected to make use of the recognition exemptions as permitted in respect of short-term leases (lease contracts with a term
of 12 months or less) and lease contracts for which the underlying asset is of low value. Such leases are not recognised on the Consolidated
Balance Sheet but the Group recognises the associated lease payments as an expense over the lease term.
Lessor
Where the Group is the lessor, leases are classified as finance leases if the risks and rewards of ownership are substantially transferred to
the lessee and operating leases if they are not substantially transferred.
The Group leases certain investment properties to third parties. Under these agreements, substantially all the risks and rewards incidental to
ownership are transferred to the lessee and therefore the contracts have been classified as finance leases. At the lease commencement date,
the\u00a0Group derecognises the investment property asset and recognises a receivable asset on its Consolidated Balance Sheet to reflect the net
investment in the\u00a0lease, equal to the present value of the lease payments. The Group recognises finance income over the lease term to reflect
the rate of return on\u00a0the net investment in the lease.
Under other lease agreements the Group is considered to substantially retain all the risks and rewards of ownership of the underlying asset,
therefore these contracts have been classified as operating leases. Lease income from operating leases is recognised in the Consolidated
Income Statement on\u00a0a straight-line basis over the lease term.
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow
of\u00a0resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can
be\u00a0made. Where the Group expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised
as\u00a0a\u00a0separate asset but only when the reimbursement is virtually certain. The Group recognises a provision for onerous contracts when the
expected benefits to be derived from a contract are less than the unavoidable costs of meeting the obligations under the contract.
Tax
Current tax
Current tax comprises tax payable on current year profits, adjusted for non-tax deductible or non-taxable items and any adjustments to tax
payable in respect of previous periods. Current tax is recognised in the Consolidated Income Statement unless it relates to items which are
recognised in the Consolidated Statement of Comprehensive Income or directly in equity.
Deferred tax
Deferred tax is calculated on differences between the accounting value of assets and liabilities and their respective tax values. Deferred tax
is also recognised in respect of unused tax losses to the extent it is probable that future taxable profits will arise against which the losses
can be utilised. Deferred tax is charged or credited to the Consolidated Income Statement, except when it relates to items charged or
credited to the Consolidated Statement of Comprehensive Income or charged or credited directly in equity.
Tax attributable to policyholders and equity holders
The total tax expense shown in the Group\u2019s Consolidated Income Statement includes income tax borne by both policyholders and equity
holders. This has been split between tax attributable to policyholders\u2019 returns and equity holders\u2019 profits. Policyholder tax comprises the
tax suffered on policyholder investment returns, while equity holder tax is corporation tax charged on equity holder profit. The separate
presentation is intended to provide more relevant information about the tax that the Group pays on the profits that it makes.
Use of estimates
Tax balances include the use of estimates and assumptions which affect items reported in the Consolidated Balance Sheet, Consolidated
Income Statement and Consolidated Statement of Comprehensive Income. Although these estimates are based on management\u2019s best
knowledge of current circumstances and future events and actions, actual results may differ from those estimates.
For tax this includes the determination of assets and liabilities recognised in respect of uncertain tax positions and the estimation of future
taxable income supporting deferred tax asset recognition.
As the Group operates internationally, it is exposed to uncertain tax positions and changes in legislation in the jurisdictions in which it
operates. The assessment of uncertain tax positions is subjective and significant management judgement is required. This judgement is
based on interpretation of legislation, management experience and professional advice. The directors have assessed the Group\u2019s uncertain
tax positions and are comfortable that the provisions in place are not material individually or in aggregate and that a reasonable possible
alternative outcome in the\u00a0next financial year would not have a material impact to the results of the Group.
Foreign exchange and exchange rates
Foreign currency transactions are translated into the functional currency using the exchange rate prevailing at the date of the transactions.
The\u00a0functional currency of the Group\u2019s foreign operations is the currency of the primary economic environment in which the entity operates.
The\u00a0assets and liabilities of all of the Group\u2019s foreign operations are translated into sterling, the Group\u2019s presentation currency, at the closing
rate\u00a0at\u00a0the date of the Consolidated Balance Sheet. Income and expenses are translated at average exchange rates. On consolidation,
exchange differences arising from the translation of the net investment in foreign entities and of borrowings and other currency instruments
designated as\u00a0hedges of such investments, are taken to a separate component of shareholders\u2019 equity.
Foreign exchange gains and losses are recognised in the Consolidated Income Statement, except when recognised in equity as qualifying
cash flow or net investment hedges.
Share-based payments
The Group accounts for options and awards under equity compensation plans, until such time as they are fully vested, using the fair value
based\u00a0method of accounting. The fair value at the date of grant of the equity instrument is recognised as an expense, spread over the vesting
period of the instrument. The total amount to be expensed is determined by reference to the fair value of the awards, excluding the impact of
any\u00a0non-market vesting conditions. At each balance sheet date, the Group revises its estimate of the number of equity instruments which are
expected to become exercisable. It recognises the impact of the revision of original estimates, if any, in the Consolidated Income Statement
and a\u00a0corresponding adjustment is made to equity. On vesting or exercise, the difference between the expense charged to the Consolidated
Income Statement and the actual cost to the Group is\u00a0transferred to Retained earnings. Where new shares are issued, the proceeds received
are credited to Share capital and Share premium.
Share capital, share premium and employee scheme treasury shares
An equity instrument is any contract which evidences a residual interest in the net assets of an entity. It follows that a financial instrument
is\u00a0treated as equity if:
\u2022 there is no contractual obligation to deliver cash or other financial assets or to exchange financial assets or liabilities on unfavourable
terms
\u2022 the instrument is either a non-derivative which contains no contractual obligation to deliver a variable number of own equity instruments,
or\u00a0is\u00a0a\u00a0derivative which will be settled only by the Group exchanging a fixed amount of cash, or other financial assets, for a fixed number
of\u00a0its\u00a0own equity instruments.
Where any Group entity purchases the Company\u2019s equity share capital, the consideration paid, including any directly attributable
incremental costs\u00a0(net of income taxes), is deducted from equity attributable to shareholders. Where such shares are subsequently
sold, reissued or otherwise\u00a0disposed of, any consideration received is included in equity attributable to shareholders, net of any directly
attributable incremental transaction costs and the related income tax effects. Shares held on behalf of employee share schemes are
disclosed as such on the Consolidated Balance Sheet.
Fiduciary activities
Assets associated with fiduciary activities and the income arising from those assets, together with associated commitments to return such
assets to customers, are not included in these financial statements. Where the Group acts in a fiduciary capacity, for instance as a trustee
or\u00a0agent, it has no contractual rights over the assets concerned.
(ix) Foreign exchange and exchange rates
The principal foreign exchange rates used for translation are:
Year end exchange rates
2025
2024
US Dollar
1.35
1.25
Euro
1.15
1.21
Average exchange rates
2025
2024
US Dollar
1.32
1.28
Euro
1.17
1.18
", "dimensions": { "concept": "ifrs-full:DisclosureOfMaterialAccountingPolicyInformationExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-573": { "value": "Legal & General Group Plc", "dimensions": { "concept": "ifrs-full:NameOfParentEntity", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-574": { "value": "Legal & General Group Plc", "dimensions": { "concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-575": { "value": "public limited company", "dimensions": { "concept": "ifrs-full:LegalFormOfEntity", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-576": { "value": "England and Wales", "dimensions": { "concept": "ifrs-full:DomicileOfEntity", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-577": { "value": "England and Wales", "dimensions": { "concept": "ifrs-full:CountryOfIncorporation", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-578": { "value": "United Kingdom (UK), the United States, Bermuda and other countries throughout the world", "dimensions": { "concept": "ifrs-full:PrincipalPlaceOfBusiness", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-579": { "value": "
The Group financial statements, which comprise the information on pages 131 to 234, except the information disclosed as being unaudited,
have been prepared in accordance with UK-adopted international accounting standards, comprising International Accounting Standards
and\u00a0IFRS as issued by the International Accounting Standards Board (IASB) and related interpretations issued by the IFRS Interpretations
Committee. Endorsement is granted by the UK Endorsement Board (UKEB). The Group financial statements have been prepared under the
historical cost convention, as modified by the revaluation of investment property, financial assets at fair value through other comprehensive
income and certain assets and financial liabilities (including derivative instruments) at\u00a0fair value through profit or loss.
", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-580": { "value": "
(ii) Going concern
The Group\u2019s business activities, together with the factors likely to affect its future development, performance and position in the current
economic environment are set out in this Annual report and accounts. The financial position of the Group, its cash flows, liquidity position and
borrowing facilities are described in these consolidated financial statements. Principal risks and uncertainties are detailed on pages 42 to 46
The directors have made an assessment of the Group\u2019s going concern, considering both the current performance and the outlook for a period
of at least, but not limited to, 12 months from the date of approval of these consolidated financial statements, using the information available
up to the date of issue of this Annual report and accounts.
The Group manages and monitors its capital and liquidity and applies various stresses, including adverse inflation and interest rate scenarios,
to those positions to understand potential impacts from market downturns. Our key sensitivities and the impacts on our capital position from
a range of\u00a0stresses are disclosed in Note 28 Management of capital resources (this note is unaudited). These stresses do not give rise to any
material uncertainties over the ability of\u00a0the Group to continue as a going concern. Based upon the available information, the directors consider that
the Group has the plans and resources to manage its business risks successfully and that it remains financially strong and well diversified.
Having reassessed the principal risks and uncertainties (both financial and operational) in light of the current economic environment, as detailed
on pages 42 to 46, the directors are confident that the Group and Company will have sufficient funds to continue to meet its liabilities as they
fall due for a period of, but not limited to, 12 months from the date of approval of the financial statements and therefore have considered it
appropriate to adopt the going concern basis of accounting when preparing the financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGoingConcernExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-581": { "value": "
(iii) Impact of the sale of the Group's US insurance entity on financial reporting
On 7 February 2025 the Group announced that it had agreed to sell its US insurance entity, comprising its US protection and US pension
risk transfer (PRT) businesses, through the disposal of its entire shareholding in Legal & General America Inc., the parent company of Banner
Life and William Penn, to Meiji Yasuda Life Insurance Company (Meiji Yasuda), a Japanese mutual life insurer, for $2.3bn. The transaction
completed on 2\u00a0February 2026 for proceeds of $2.6bn (which reflects net asset transfers and the impact of business performance since
1 January 2025).
Following completion, Meiji Yasuda became the owner of the Group's US protection business and now holds a 20% economic interest in
its US PRT business. The Group has retained 80% of existing and new PRT business through a new reinsurance agreement with Meiji
Yasuda.
The transaction has had the following impacts on financial reporting:
\u2022 In accordance with IFRS 5, 'Non-current Assets Held for Sale and Discontinued Operations' the Group's US insurance entity qualifies for
classification and measurement as a held for sale disposal group. This includes the entirety of the US protection and US PRT businesses.
\u2022 The disposal group also meets the definition of discontinued operations. As a consequence, the results of the disposal group for the year
ended 31 December 2025 have been presented in separate lines within the Group Consolidated Income Statement and Consolidated
Statement of Comprehensive Income. Comparative information has been re-presented accordingly in line with IFRS 5 requirements.
\u2022 The composition of the Group's reportable segments in accordance with IFRS 8 'Operating Segments', has changed. In preparation for the
completion of the disposal, the results related to the Group's US protection business and 20% of those related to the US PRT business have
now been reported to key decision makers separately. As a consequence, they are no longer included in the results of the Insurance and
Institutional Retirement segments and are now presented separately as \"Non-retained US business\". Exposure to the remaining 80% of the
US PRT business will be retained by way of the new reinsurance agreement and therefore these results continue to be reported within
Institutional Retirement. Segmental information in relation to the prior year has been re-presented where applicable to reflect these changes.
\u2022 The calculation of core operating profit and core operating earnings per share (core operating EPS), two of the Group\u2019s Alternative
Performance Measures (APMs), has been updated. Non-retained US business is no longer considered to be key to achieving the Group\u2019s
strategy and therefore, in line with the definition of core operating profit and core operating EPS, its results are now excluded from their
calculation. Prior year comparatives have been restated accordingly. As a result of the change, core operating profit for the year ended
31 December 2024 has decreased by \u00a382m (from \u00a31,616m to \u00a31,534m). Core operating EPS for the year ended 31 December 2024
has decreased by 1.03pps (from 20.23pps to 19.20pps).
", "dimensions": { "concept": "ifrs-full:DisclosureOfReclassificationsOrChangesInPresentationExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-583": { "value": "
(iv) New standards, interpretations and amendments to published standards that have been adopted by the Group
The Group has applied Amendments to IAS 21, \u2018The Effects of Changes in Foreign Exchange Rates\u2019: \u2018Lack of Exchangeability' for the first
time in the year commencing 1 January 2025, which did not have a material impact on its consolidated financial statements.
(v) Standards, interpretations and amendments to published standards which are not yet effective
Amendments to IFRS 9, \u2018Financial Instruments\u2019 and IFRS 7, \u2018Financial Instruments: Disclosures\u2019: \u2018Amendments to the Classification and
Measurement of Financial Instruments\u2019
These amendments, issued in May 2024, provide the following:
\u2022 clarification around the date of recognition and derecognition of some financial assets and liabilities, with a new exception for some
financial liabilities settled through an electronic cash transfer system
\u2022 clarification and guidance for assessing whether a financial asset meets the solely payments of principal and interest (SPPI) criterion
\u2022 new disclosure requirements for certain instruments with contractual terms that can change cash flows (such as some financial
instruments with features linked to the achievement of environment, social and governance targets)
\u2022 an update to the disclosures for equity instruments designated at fair value through other comprehensive income (FVOCI).
The amendments are effective for annual reporting periods beginning on or after 1 January 2026. These amendments are not expected
to give rise to a material impact on the Group\u2019s consolidated financial statements.
Annual improvements to IFRS Accounting Standards \u2013 Volume 11
The IASB issued its annual improvements in July 2024, which include a collection of minor amendments to accounting standards, applicable
for annual reporting periods beginning on or after 1 January 2026. These are not expected to give rise to a material impact
on the Group\u2019s consolidated financial statements.
IFRS 18, \u2018Presentation and Disclosure in Financial Statements\u2019
IFRS 18, issued in April 2024, will replace IAS 1, \u2018Presentation of Financial Statements\u2019. IFRS 18 introduces new requirements for
presentation within the income statement, including specified totals and subtotals, which aim at increasing comparability of the
financial performance of similar entities, as well as provide more relevant information and transparency to users.
The standard is effective for reporting periods beginning on or after 1 January 2027, with earlier application permitted. The Group is currently
assessing the impacts of the amendments on the consolidated and Company financial statements, in particular around the presentation of its
results within the Consolidated Income Statement and the definition and disclosure of management-defined performance measures.
IFRS 19, \u2018Subsidiaries without Public Accountability: Disclosures\u2019
IFRS 19, issued in May 2024, allows for certain eligible subsidiaries of parent entities that report under IFRS Accounting Standards to apply
reduced disclosure requirements. IFRS 19 is effective for reporting periods beginning on or after 1 January 2027, with early application
permitted, subject to UK endorsement. The Group is not eligible to apply IFRS 19.", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-582": { "value": "
(iv) New standards, interpretations and amendments to published standards that have been adopted by the Group
The Group has applied Amendments to IAS 21, \u2018The Effects of Changes in Foreign Exchange Rates\u2019: \u2018Lack of Exchangeability' for the first
time in the year commencing 1 January 2025, which did not have a material impact on its consolidated financial statements.
", "dimensions": { "concept": "ifrs-full:DescriptionOfInitialApplicationOfStandardsOrInterpretations", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-584": { "value": "
(v) Standards, interpretations and amendments to published standards which are not yet effective
Amendments to IFRS 9, \u2018Financial Instruments\u2019 and IFRS 7, \u2018Financial Instruments: Disclosures\u2019: \u2018Amendments to the Classification and
Measurement of Financial Instruments\u2019
These amendments, issued in May 2024, provide the following:
\u2022 clarification around the date of recognition and derecognition of some financial assets and liabilities, with a new exception for some
financial liabilities settled through an electronic cash transfer system
\u2022 clarification and guidance for assessing whether a financial asset meets the solely payments of principal and interest (SPPI) criterion
\u2022 new disclosure requirements for certain instruments with contractual terms that can change cash flows (such as some financial
instruments with features linked to the achievement of environment, social and governance targets)
\u2022 an update to the disclosures for equity instruments designated at fair value through other comprehensive income (FVOCI).
The amendments are effective for annual reporting periods beginning on or after 1 January 2026. These amendments are not expected
to give rise to a material impact on the Group\u2019s consolidated financial statements.
Annual improvements to IFRS Accounting Standards \u2013 Volume 11
The IASB issued its annual improvements in July 2024, which include a collection of minor amendments to accounting standards, applicable
for annual reporting periods beginning on or after 1 January 2026. These are not expected to give rise to a material impact
on the Group\u2019s consolidated financial statements.
IFRS 18, \u2018Presentation and Disclosure in Financial Statements\u2019
IFRS 18, issued in April 2024, will replace IAS 1, \u2018Presentation of Financial Statements\u2019. IFRS 18 introduces new requirements for
presentation within the income statement, including specified totals and subtotals, which aim at increasing comparability of the
financial performance of similar entities, as well as provide more relevant information and transparency to users.
The standard is effective for reporting periods beginning on or after 1 January 2027, with earlier application permitted. The Group is currently
assessing the impacts of the amendments on the consolidated and Company financial statements, in particular around the presentation of its
results within the Consolidated Income Statement and the definition and disclosure of management-defined performance measures.
IFRS 19, \u2018Subsidiaries without Public Accountability: Disclosures\u2019
IFRS 19, issued in May 2024, allows for certain eligible subsidiaries of parent entities that report under IFRS Accounting Standards to apply
reduced disclosure requirements. IFRS 19 is effective for reporting periods beginning on or after 1 January 2027, with early application
permitted, subject to UK endorsement. The Group is not eligible to apply IFRS 19.", "dimensions": { "concept": "ifrs-full:DescriptionOfExpectedImpactOfInitialApplicationOfNewStandardsOrInterpretations", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-585": { "value": "
(vi) Critical accounting judgements and the use of estimates
The preparation of the financial statements includes the use of estimates and assumptions which affect items reported in the Consolidated
Balance Sheet and Consolidated Income Statement and the disclosure of contingent assets and liabilities at the date of the financial
statements. Although these estimates are based on management\u2019s best knowledge of current circumstances and future events and actions,
material adjustments could be made to the carrying amounts of assets and liabilities within the next financial year. The Audit Committee
reviews the reasonableness of judgements associated with and the application of material accounting policies. The significant accounting
matters considered by the Audit Committee in respect of the year ended 31 December 2025 are included within the Audit Committee report
on page 69.
The major areas of critical accounting judgement on policy application are considered below:
Insurance and investment contract liabilities (Notes 22 and 23): Product classification and the assessment of the significance of\u00a0insurance
risk transferred to the Group in determining whether a contract should be accounted for as an insurance or\u00a0investment\u00a0contract
Contracts which transfer significant insurance risk to the Group are classified as insurance contracts. Contracts that transfer financial risk
(e.g.\u00a0change in interest rate or security price) to the Group but not significant insurance risk are classified as investment contracts.
Judgement is required in order to assess the significance of the transfer of insurance risk within a contract. This assessment is based
on whether the occurrence of an insured event could cause the Group to make significant additional payments, i.e. if the occurrence
of the event causes significantly higher cash out flows for the Group than its non-occurrence.
Certain contracts, which are both insurance and investment, can contain discretionary features representing the contractual right to receive
additional benefits as a supplement to guaranteed benefits under certain conditions, being:
\u2022 that the additional benefits are a significant portion of the total contractual benefits
\u2022 the timing and amount of the additional benefits is at the discretion of the Group
\u2022 that the additional benefits are contractually dependent upon the performance of an entity, fund or specified pool of assets.
Insurance contracts and investment contracts with such discretionary participation features are accounted for under IFRS 17, while
investment contracts without discretionary participation features are accounted for as financial instruments under IFRS 9.
Judgement is therefore required in order to establish whether any additional benefits in an insurance or investment contract meet the above
requirements for being considered discretionary participation features.
Consolidation (Notes 41-43): Assessment of whether the Group controls underlying entities and should therefore consolidate them.
The assessment takes account of various criteria, including decision-making ability, equity holding and the rights to a variable return from
the\u00a0entity.
Control arises when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect
those returns through its power over the entity.
For operating entities this generally accompanies a shareholding of 50% or more in the entity. Subsidiaries that are consolidated where the
Group owns less than 50% of the ordinary share capital (structured entities), are consolidated based on an assessment of control normally
arising from special rights attaching to the class of share owned, other contractual arrangements and factors such as the purpose of the
investee, the nature of its relevant activities, voting rights (including potential voting rights) and substantive and protective rights.
The Group invests in various fund and unit trust entities where it also acts as the asset manager to those entities. In these instances, in
determining whether the Group controls the entities, the assessment focuses on the aggregate economic interests of the Group (direct
interest and expected management fees) and on whether the Group acts as a principal or agent. This includes an assessment of the removal
rights of other investors (their practical ability to allow the Group not to control the fund). Additionally, holdings in such investments can
fluctuate on a daily basis according to\u00a0the participation of the Group and other investors in them. As a result, in determining control, we look
at an assessment of these factors over a\u00a0longer period to mitigate the impact of daily fluctuations which do not reflect the wider facts and
circumstances of the Group\u2019s involvement. This\u00a0is performed in line with the following principles:
\u2022 where the entity is managed by a Group asset manager and the Group\u2019s ownership holding in the entity exceeds 50%, the Group is judged
to\u00a0have control over the entity
\u2022 where the entity is managed by a Group asset manager and the Group\u2019s ownership holding in the entity is between 30% and 50%, the
facts and\u00a0circumstances of the Group\u2019s involvement in the entity are considered, including the rights to any fees earned by the asset
manager from\u00a0the entity, in forming a judgement as to whether the Group has control over the entity
\u2022 where the entity is managed by a Group asset manager and the Group\u2019s ownership holding in the entity is less than 30%, the Group is
judged to\u00a0not have control over the entity, but again the facts and circumstances of the Group\u2019s involvement in the entity are considered.
The following sets out information about the critical accounting assumptions made by the Group about the future and other major sources
of\u00a0estimation uncertainty at the end of the reporting period, that have a significant risk of resulting in a material adjustment to the carrying
amounts of assets and liabilities within the next financial year:
Valuation of insurance contract liabilities (Notes 20-22)
The key judgements around the valuation of insurance contract liabilities relate to the following assumptions:
\u2022 determination of the longevity, mortality and morbidity assumptions used in the calculation of the insurance contract liabilities; the
assumptions for the rate of future longevity, mortality and morbidity are based on the Group\u2019s internal experience and judgements
about how experience may vary in the future. This assessment takes into account market benchmarking, internal experience studies
and independent industry data. The long-term assumptions are adjusted to reflect the Group\u2019s view on the effects of the Covid-19
pandemic on claims experience in the medium to long-term, informed by emerging experience and industry studies
\u2022 determination of the directly attributable expense assumptions used in the calculation of the insurance liabilities. These represent the
expected future costs that relate directly to the fulfilment of the underlying insurance policies and are based on management\u2019s best
estimate of these future costs and on an appropriate allocation between servicing new and existing business
\u2022 determination of valuation interest rates used to discount the liabilities, which are sensitive to the assumptions made, for example, on
credit default of the backing assets. These assumptions take into account consideration of market experience and historic internal data.
The valuation interest rate is also sensitive to the selection of the reference portfolio of assets chosen to back the liabilities
\u2022 determination of the compensation required for bearing the uncertainty about the amount and timing of the cash flows arising from
non-financial risks as insurance contracts are fulfilled, in the calculation of the risk adjustment
\u2022 determination of the weighting of the coverage units, used to calculate the CSM amortisation in the year, between the payment phase
and\u00a0the\u00a0deferral phase for deferred annuities. Judgement is required to combine the different coverage units so that they fairly reflect
the\u00a0services\u00a0provided
\u2022 determination of the transition date CSM under IFRS 17 incorporated judgement. In particular, judgements made in the calculation of the
CSM\u00a0for portfolios transitioned using the fair value approach at 1 January 2022 continue to be a component of the current valuation of
the\u00a0CSM\u00a0until those portfolios expire.
Note 21 includes a sensitivity analysis on post-tax Group profit and Group equity to reasonable alternative assumptions.
Valuation of unquoted illiquid assets and investment property (Note 13)
Determination of fair value of unquoted and illiquid assets and investment property involves judgements in model valuations, through the
incorporation of both observable and unobservable market inputs, which include assumptions that lead to the existence of a range of
plausible valuations for financial assets.
In assessing asset valuation, in line with applicable standards and guidance, the Group has both projected the short-term impact on earnings
and\u00a0cash flows of the current market volatility, while continuing to review the assets\u2019 ability to deliver longer term returns aligned to their
investment cases.
Note 21 includes a sensitivity analysis on the fair value of unquoted illiquid assets and investment property to reasonable alternative assumptions.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-586": { "value": "(vi) Critical accounting judgements and the use of estimatesThe preparation of the financial statements includes the use of estimates and assumptions which affect items reported in the Consolidated Balance Sheet and Consolidated Income Statement and the disclosure of contingent assets and liabilities at the date of the financial statements. Although these estimates are based on management\u2019s best knowledge of current circumstances and future events and actions, material adjustments could be made to the carrying amounts of assets and liabilities within the next financial year. The Audit Committee reviews the reasonableness of judgements associated with and the application of material accounting policies. The significant accounting matters considered by the Audit Committee in respect of the year ended 31 December 2025 are included within the Audit Committee report on page 69.The major areas of critical accounting judgement on policy application are considered below:Insurance and investment contract liabilities (Notes 22 and 23): Product classification and the assessment of the significance of\u00a0insurance risk transferred to the Group in determining whether a contract should be accounted for as an insurance or\u00a0investment\u00a0contractContracts which transfer significant insurance risk to the Group are classified as insurance contracts. Contracts that transfer financial risk (e.g.\u00a0change in interest rate or security price) to the Group but not significant insurance risk are classified as investment contracts. Judgement is required in order to assess the significance of the transfer of insurance risk within a contract. This assessment is based on whether the occurrence of an insured event could cause the Group to make significant additional payments, i.e. if the occurrence of the event causes significantly higher cash out flows for the Group than its non-occurrence.Certain contracts, which are both insurance and investment, can contain discretionary features representing the contractual right to receive additional benefits as a supplement to guaranteed benefits under certain conditions, being:\u2022 that the additional benefits are a significant portion of the total contractual benefits\u2022 the timing and amount of the additional benefits is at the discretion of the Group\u2022 that the additional benefits are contractually dependent upon the performance of an entity, fund or specified pool of assets.Insurance contracts and investment contracts with such discretionary participation features are accounted for under IFRS 17, while investment contracts without discretionary participation features are accounted for as financial instruments under IFRS 9. Judgement is therefore required in order to establish whether any additional benefits in an insurance or investment contract meet the above requirements for being considered discretionary participation features.Consolidation (Notes 41-43): Assessment of whether the Group controls underlying entities and should therefore consolidate them. The assessment takes account of various criteria, including decision-making ability, equity holding and the rights to a variable return from the\u00a0entity.Control arises when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. For operating entities this generally accompanies a shareholding of 50% or more in the entity. Subsidiaries that are consolidated where the Group owns less than 50% of the ordinary share capital (structured entities), are consolidated based on an assessment of control normally arising from special rights attaching to the class of share owned, other contractual arrangements and factors such as the purpose of the investee, the nature of its relevant activities, voting rights (including potential voting rights) and substantive and protective rights. The Group invests in various fund and unit trust entities where it also acts as the asset manager to those entities. In these instances, in determining whether the Group controls the entities, the assessment focuses on the aggregate economic interests of the Group (direct interest and expected management fees) and on whether the Group acts as a principal or agent. This includes an assessment of the removal rights of other investors (their practical ability to allow the Group not to control the fund). Additionally, holdings in such investments can fluctuate on a daily basis according to\u00a0the participation of the Group and other investors in them. As a result, in determining control, we look at an assessment of these factors over a\u00a0longer period to mitigate the impact of daily fluctuations which do not reflect the wider facts and circumstances of the Group\u2019s involvement. This\u00a0is performed in line with the following principles:\u2022 where the entity is managed by a Group asset manager and the Group\u2019s ownership holding in the entity exceeds 50%, the Group is judged to\u00a0have control over the entity\u2022 where the entity is managed by a Group asset manager and the Group\u2019s ownership holding in the entity is between 30% and 50%, the facts and\u00a0circumstances of the Group\u2019s involvement in the entity are considered, including the rights to any fees earned by the asset manager from\u00a0the entity, in forming a judgement as to whether the Group has control over the entity\u2022 where the entity is managed by a Group asset manager and the Group\u2019s ownership holding in the entity is less than 30%, the Group is judged to\u00a0not have control over the entity, but again the facts and circumstances of the Group\u2019s involvement in the entity are considered.The following sets out information about the critical accounting assumptions made by the Group about the future and other major sources of\u00a0estimation uncertainty at the end of the reporting period, that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year:Valuation of insurance contract liabilities (Notes 20-22)The key judgements around the valuation of insurance contract liabilities relate to the following assumptions:\u2022 determination of the longevity, mortality and morbidity assumptions used in the calculation of the insurance contract liabilities; the assumptions for the rate of future longevity, mortality and morbidity are based on the Group\u2019s internal experience and judgements about how experience may vary in the future. This assessment takes into account market benchmarking, internal experience studies and independent industry data. The long-term assumptions are adjusted to reflect the Group\u2019s view on the effects of the Covid-19 pandemic on claims experience in the medium to long-term, informed by emerging experience and industry studies\u2022 determination of the directly attributable expense assumptions used in the calculation of the insurance liabilities. These represent the expected future costs that relate directly to the fulfilment of the underlying insurance policies and are based on management\u2019s best estimate of these future costs and on an appropriate allocation between servicing new and existing business\u2022 determination of valuation interest rates used to discount the liabilities, which are sensitive to the assumptions made, for example, on credit default of the backing assets. These assumptions take into account consideration of market experience and historic internal data. The valuation interest rate is also sensitive to the selection of the reference portfolio of assets chosen to back the liabilities\u2022 determination of the compensation required for bearing the uncertainty about the amount and timing of the cash flows arising from non-financial risks as insurance contracts are fulfilled, in the calculation of the risk adjustment\u2022 determination of the weighting of the coverage units, used to calculate the CSM amortisation in the year, between the payment phase and\u00a0the\u00a0deferral phase for deferred annuities. Judgement is required to combine the different coverage units so that they fairly reflect the\u00a0services\u00a0provided\u2022 determination of the transition date CSM under IFRS 17 incorporated judgement. In particular, judgements made in the calculation of the CSM\u00a0for portfolios transitioned using the fair value approach at 1 January 2022 continue to be a component of the current valuation of the\u00a0CSM\u00a0until those portfolios expire.Note 21 includes a sensitivity analysis on post-tax Group profit and Group equity to reasonable alternative assumptions.Valuation of unquoted illiquid assets and investment property (Note 13)Determination of fair value of unquoted and illiquid assets and investment property involves judgements in model valuations, through the incorporation of both observable and unobservable market inputs, which include assumptions that lead to the existence of a range of plausible valuations for financial assets.In assessing asset valuation, in line with applicable standards and guidance, the Group has both projected the short-term impact on earnings and\u00a0cash flows of the current market volatility, while continuing to review the assets\u2019 ability to deliver longer term returns aligned to their investment cases.Note 21 includes a sensitivity analysis on the fair value of unquoted illiquid assets and investment property to reasonable alternative assumptions.", "dimensions": { "concept": "ifrs-full:ExplanationOfAssumptionAboutFutureWithSignificantRiskOfResultingInMaterialAdjustments", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-587": { "value": "
Insurance and investment contract liabilities (Notes 22 and 23): Product classification and the assessment of the significance of\u00a0insurance
risk transferred to the Group in determining whether a contract should be accounted for as an insurance or\u00a0investment\u00a0contract
Contracts which transfer significant insurance risk to the Group are classified as insurance contracts. Contracts that transfer financial risk
(e.g.\u00a0change in interest rate or security price) to the Group but not significant insurance risk are classified as investment contracts.
Judgement is required in order to assess the significance of the transfer of insurance risk within a contract. This assessment is based
on whether the occurrence of an insured event could cause the Group to make significant additional payments, i.e. if the occurrence
of the event causes significantly higher cash out flows for the Group than its non-occurrence.
Certain contracts, which are both insurance and investment, can contain discretionary features representing the contractual right to receive
additional benefits as a supplement to guaranteed benefits under certain conditions, being:
\u2022 that the additional benefits are a significant portion of the total contractual benefits
\u2022 the timing and amount of the additional benefits is at the discretion of the Group
\u2022 that the additional benefits are contractually dependent upon the performance of an entity, fund or specified pool of assets.
Insurance contracts and investment contracts with such discretionary participation features are accounted for under IFRS 17, while
investment contracts without discretionary participation features are accounted for as financial instruments under IFRS 9.
Judgement is therefore required in order to establish whether any additional benefits in an insurance or investment contract meet the above
requirements for being considered discretionary participation features.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantJudgementsAndChangesInJudgementsMadeInApplyingIFRS17Explanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-588": { "value": "
(vii) Consideration of climate change
The Group recognises emerging risks from both climate change and nature loss and the interrelationship between our climate and the
natural world. Climate change is the Group\u2019s most material sustainability issue, but the Group continues to develop its understanding
of its impacts and dependencies on nature, concurrently with its consideration of the impacts from climate change.
The Group is exposed to climate change through two broad categories: transition risks from the move to a low-carbon economy and the
impact this has on asset valuation and the economy; and physical risks from the impact on asset holdings as a result of severe weather
events and longer-term shifts in climate.
The Group has integrated climate risk management into its governance framework and has carried out a detailed assessment of how we
could expect climate risk to emerge across our business model. The Group risk mitigation strategy includes setting portfolio carbon intensity
targets, integrating carbon controls into the investment processes through stock exclusions and high carbon escalation, corporate engagement
and implementing high energy efficiency standards into the Group\u2019s directly owned commercial property and housing businesses.
The Group is committed to net zero, promoting a 1.5\u00b0C \u2018Paris-aligned transition\u2019. In order to meet its environmental goals, the Group has set
for itself a\u00a0number of targets and commitments, clearly linked with its business strategy and risk management controls. These are based on
the three key areas of our Group-wide activity, as an asset owner, an asset manager and in our own operations. Metrics and targets have
been defined around the Group\u2019s operational carbon footprint, investment portfolio economic carbon intensity and implied portfolio temperature
alignment. These are being targeted through the decarbonisation of the Group\u2019s balance sheet, investing in the transition, development of
climate friendly investment products and focus on own operations. The Group also continues to drive greater action as an asset manager to
address financially material climate and nature risks in the real economy consistent with our fiduciary duty.
Scenario analysis is performed to help understand the strategic implications of possible climate pathways, including the key features of a
transition to a net zero economy. Plausible scenarios have been developed based on estimations of how the energy system may evolve over
the next 30 years, using the most recent carbon budgets from the Intergovernmental Panel on Climate Change\u2019s Sixth Assessment Report
(AR6) and incorporated latest data on technology costs. These include two different pathways to \u2018below 2\u00b0C\u2019 and a scenario assuming
achievement of net zero. Given the Group\u2019s long-term climate risk relates to transition risk, a fourth scenario assuming global failure to act
on climate change and emissions growth at historical rates has been modelled, but the impacts have not been applied to our portfolio. Such
impacts are driven by physical risks which tend to be highly localised and manifest further into the future and are therefore more uncertain.
However, more broadly on physical risks, our modelling capabilities allow us to assess how acute events, such as floods and storms in the
High emissions scenario, may affect asset values, operations, and long-term resilience, as considered in our investment due diligence and
valuation uncertainty analysis.
In preparing the consolidated financial statements, the Group has considered the impact of climate change and in particular the transition
to a lower carbon economy, on the valuation of the Group\u2019s assets and liabilities. In the Strategic report, with additional information in the
Group\u2019s Climate and nature report, we have set out in detail the various risks and opportunities that are created by this transition and how
they may impact the Group across various time horizons. In line with the recommendations of the Task Force on Climate-related Financial
Disclosures, we have further described the resilience of the Group\u2019s strategy, taking into consideration different climate-related scenarios, as
described above. There is no one single scenario that underpins the financial statements. The scenarios help challenge the Group\u2019s perspectives
on the future business and economic environment as a result of the transition to a lower carbon economy, including consideration of events
that may be only remotely possible. As a result, the scenarios covered are not intended to be predictions of likely future events or outcomes
and are not the basis on which the Group\u2019s consolidated financial statements have been prepared.
At the current time, the Group does not consider climate risk to represent a significant area of judgement or of estimation uncertainty.
As at 31 December 2025, no material impacts on the Group\u2019s financial position, nor on the valuation of assets or liabilities on the Group\u2019s
Consolidated Balance Sheet as a result of climate change risk have been identified. In arriving at this determination, the Group has in
particular taken into account the following areas of judgement, which we consider to be those most exposed to the potential impact of
climate change in the preparation of the financial statements:
Going concern and viability
In preparing the consolidated financial statements, the directors are required to assess the Group\u2019s ability to continue as a going concern, by
taking into account all available information related to at least 12 months from the date of their approval. Additionally, the preparation of the
viability statement takes into consideration the Group\u2019s overall business model and strategy, forecast financial strength and resilience and
the liquidity profile over the planning horizon. Climate-related matters have been considered as part of these assessments and have not
been deemed to create material uncertainties as to their conclusions or to require specific disclosure.
Valuation of Level 3 financial investments and investment property
The valuation of unquoted illiquid assets and investment property has been separately identified as an area of significant estimation
uncertainty. The assumptions used in the models underpinning these assets\u2019 valuations, such as cash flows forecasts, discount rates
and multiples, are often unobservable. Due to the need to apply significant judgements, these assumptions can be impacted by transition
risk, with climate-related inputs gaining more traction (e.g. construction methods and materials, EPC ratings, ESG credentials and climate
resilience). This is particularly relevant for the Group\u2019s Private Markets portfolio, including alternative assets. Where possible, the Group\u2019s
assets are valued using standard market pricing sources or appropriately qualified external valuers and therefore reflect current market
sentiments around climate risk. In this respect market and investor expectations have also been evolving, with greater demand towards
net zero-aligned assets and away from traditional carbon-intensive methods, impacting expected investor returns and therefore discount
rates and multiples. Exposure to the risks of climate change is minimised through rigorous assessment of potential investments and active
monitoring of the carbon intensity of the current portfolio. Additionally, investment properties are being reviewed by independent third
parties, where applicable, with regards to potential retrofitting, to help reduce carbon emissions and make them more efficient and
sustainable for the future.
Asset impairment and residual economic life
The carrying value of goodwill, intangible and certain tangible assets on the Consolidated Balance Sheet which are subject to impairment
testing\u00a0could be affected by climate change risk. For example, inventory may become obsolete or restricted, causing selling prices to decline
or\u00a0their costs of completion to increase. If, as a result, the cost of inventories is not recoverable, they would need to be written down to their
net\u00a0realisable value.
Property, plant and equipment, right-of-use assets, goodwill and intangible assets may see their recoverable amount decrease in light of
climate change and significant changes in the environment (including for example changes in regulation) in which the Group operates, where
adverse effects can represent an indication of impairment. The estimation of recoverable amount as \u2018value in use\u2019 requires an assessment of
future expected cash flows based on assumptions potentially affected by climate-related matters, particularly for goodwill and intangible
assets, which\u00a0are subject to a higher degree of judgement. Where assets are subject to amortisation or depreciation, consideration needs
to be given to\u00a0whether climate risk suggests that the residual economic life is shorter than anticipated, which would give rise to increased
charges in the income statement. Due to the nature of the Group\u2019s assets, we do not anticipate any material additional impairments or
increased amortisation and\u00a0depreciation charges to arise from climate change. Risks will continue to be monitored against judgements
and estimates used in the assessment of impairment.
Insurance contract liabilities
The Group\u2019s insurance contracts are valued using discount rates derived from the backing asset portfolios with deductions made to remove
risks\u00a0that are present in the assets but are not relevant to the insurance liability. Climate-related risks could impact on the Group\u2019s exposure
to\u00a0future credit losses which would impact on the appropriate yield deductions in the discount rate calculation and therefore the insurance
contract valuations.
Provisions and contingent liabilities
The recognition, measurement and disclosure of provisions and contingent liabilities is subject to setting assumptions around future
events and the probability of their occurrence. Climate-related matters could affect these elements, for example by requiring recognition
or disclosure of a legal obligation (e.g. levies imposed for failing climate-related targets) or of a constructive obligation (e.g. requirements
to remediate environmental damage caused by the Group\u2019s operations and investment portfolios).
Deferred tax assets
Deferred tax assets are recognised for deductible temporary differences and unused tax losses and credits, to the extent it is probable
that future taxable profit will be available, against which those amounts can be utilised. Climate-related matters could affect the Group\u2019s
estimate of future taxable profits and therefore it may be required to derecognise deferred tax assets previously on the balance sheet.
Share-based payments
The Group\u2019s performance share plans provide a direct and transparent link between executive pay and the delivery of shareholder returns
over the longer term. They are a conditional award of shares subject to a performance period of at least three years. Performance metrics
for the Group\u2019s share plans are now clearly linked to ESG metrics.
Financial instruments
Expected credit losses are required to be recognised on receivables and certain financial investments, representing the counterparty\u2019s
probability\u00a0of default over a certain time horizon. Climate-related matters may affect the Group\u2019s exposure to these losses, for example
by\u00a0negatively affecting the borrower\u2019s ability to meet their obligations, or by affecting assumptions used in the models adopted to estimate
expected credit losses.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEnvironmentRelatedExpenseExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-589": { "value": "
Consolidation principles
Subsidiary undertakings
The consolidated financial statements incorporate the assets, liabilities, equity, income, expenses and cash flows of the Company and of its
subsidiary undertakings drawn up to 31 December each year. All intra-group balances, transactions, income and expenses are eliminated in full.
Subsidiaries are those entities (including special purpose entities, mutual funds and unit trusts) over which the Group directly or indirectly
has control (i.e. when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to
affect those returns through its power over the investee) (Note 42).
Business combinations are accounted for by applying the acquisition method of accounting, which requires the Group to record the
identifiable assets and liabilities of the acquired business at fair value on the date of acquisition. The excess of the fair value of acquisition
consideration over\u00a0the recorded value of the assets and liabilities of the acquired entity is recorded on the statement of financial position
as goodwill. Profits or\u00a0losses of subsidiary undertakings sold or acquired during the year are included in the consolidated results up to the
date of disposal or from the\u00a0date of gaining control.
Puttable instruments held by external parties in consolidated investment vehicles, such as unit trusts, are classified as liabilities and appear
as\u00a0Net asset value attributable to unit holders\u2019 in the Consolidated Balance Sheet.
Associates and joint ventures
Associates are entities over which the Group has significant influence but which it does not control. It is presumed that the Group has
significant influence where it has between 20% and 50% of the voting rights in the investee unless indicated otherwise. Joint ventures
are entities where the Group and other parties have joint control over their activities.
The Group has interests in associates and joint ventures (Note 41) which form part of an investment portfolio held through private equity
vehicles, mutual funds, unit trusts and similar entities. In accordance with the choice permitted by IAS 28, \u2018Investments in Associates
and Joint Ventures\u2019, these interests have been classified as fair value through profit or loss and measured at fair value within financial
investments, with changes in fair\u00a0value recognised in the Consolidated Income Statement.
Associates and joint ventures which do not form part of an investment portfolio are initially recognised in the Consolidated Balance Sheet
at\u00a0cost. Goodwill arising on the acquisition of these associates or joint ventures is included within the carrying value of those investments.
Their carrying amount is increased or decreased to reflect the Group\u2019s share of total comprehensive income after the date of the acquisition.
Where the carrying amount of an associate or joint venture is greater than its estimated recoverable amount, which is the higher of the assets
fair value less costs of disposal and value in use, it is written down immediately to its recoverable amount, with an impairment loss
recognised in the Consolidated Income Statement.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-590": { "value": "
Subsidiary undertakings
The consolidated financial statements incorporate the assets, liabilities, equity, income, expenses and cash flows of the Company and of its
subsidiary undertakings drawn up to 31 December each year. All intra-group balances, transactions, income and expenses are eliminated in full.
Subsidiaries are those entities (including special purpose entities, mutual funds and unit trusts) over which the Group directly or indirectly
has control (i.e. when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to
affect those returns through its power over the investee) (Note 42).
Business combinations are accounted for by applying the acquisition method of accounting, which requires the Group to record the
identifiable assets and liabilities of the acquired business at fair value on the date of acquisition. The excess of the fair value of acquisition
consideration over\u00a0the recorded value of the assets and liabilities of the acquired entity is recorded on the statement of financial position
as goodwill. Profits or\u00a0losses of subsidiary undertakings sold or acquired during the year are included in the consolidated results up to the
date of disposal or from the\u00a0date of gaining control.
Puttable instruments held by external parties in consolidated investment vehicles, such as unit trusts, are classified as liabilities and appear
as\u00a0Net asset value attributable to unit holders\u2019 in the Consolidated Balance Sheet.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSubsidiariesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-593": { "value": "
Associates and joint ventures
Associates are entities over which the Group has significant influence but which it does not control. It is presumed that the Group has
significant influence where it has between 20% and 50% of the voting rights in the investee unless indicated otherwise. Joint ventures
are entities where the Group and other parties have joint control over their activities.
The Group has interests in associates and joint ventures (Note 41) which form part of an investment portfolio held through private equity
vehicles, mutual funds, unit trusts and similar entities. In accordance with the choice permitted by IAS 28, \u2018Investments in Associates
and Joint Ventures\u2019, these interests have been classified as fair value through profit or loss and measured at fair value within financial
investments, with changes in fair\u00a0value recognised in the Consolidated Income Statement.
Associates and joint ventures which do not form part of an investment portfolio are initially recognised in the Consolidated Balance Sheet
at\u00a0cost. Goodwill arising on the acquisition of these associates or joint ventures is included within the carrying value of those investments.
Their carrying amount is increased or decreased to reflect the Group\u2019s share of total comprehensive income after the date of the acquisition.
Where the carrying amount of an associate or joint venture is greater than its estimated recoverable amount, which is the higher of the assets
fair value less costs of disposal and value in use, it is written down immediately to its recoverable amount, with an impairment loss
recognised in the Consolidated Income Statement.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentsInJointVentures", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-592": { "value": "
Associates and joint ventures
Associates are entities over which the Group has significant influence but which it does not control. It is presumed that the Group has
significant influence where it has between 20% and 50% of the voting rights in the investee unless indicated otherwise. Joint ventures
are entities where the Group and other parties have joint control over their activities.
The Group has interests in associates and joint ventures (Note 41) which form part of an investment portfolio held through private equity
vehicles, mutual funds, unit trusts and similar entities. In accordance with the choice permitted by IAS 28, \u2018Investments in Associates
and Joint Ventures\u2019, these interests have been classified as fair value through profit or loss and measured at fair value within financial
investments, with changes in fair\u00a0value recognised in the Consolidated Income Statement.
Associates and joint ventures which do not form part of an investment portfolio are initially recognised in the Consolidated Balance Sheet
at\u00a0cost. Goodwill arising on the acquisition of these associates or joint ventures is included within the carrying value of those investments.
Their carrying amount is increased or decreased to reflect the Group\u2019s share of total comprehensive income after the date of the acquisition.
Where the carrying amount of an associate or joint venture is greater than its estimated recoverable amount, which is the higher of the assets
fair value less costs of disposal and value in use, it is written down immediately to its recoverable amount, with an impairment loss
recognised in the Consolidated Income Statement.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociates", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-591": { "value": "
Associates and joint ventures
Associates are entities over which the Group has significant influence but which it does not control. It is presumed that the Group has
significant influence where it has between 20% and 50% of the voting rights in the investee unless indicated otherwise. Joint ventures
are entities where the Group and other parties have joint control over their activities.
The Group has interests in associates and joint ventures (Note 41) which form part of an investment portfolio held through private equity
vehicles, mutual funds, unit trusts and similar entities. In accordance with the choice permitted by IAS 28, \u2018Investments in Associates
and Joint Ventures\u2019, these interests have been classified as fair value through profit or loss and measured at fair value within financial
investments, with changes in fair\u00a0value recognised in the Consolidated Income Statement.
Associates and joint ventures which do not form part of an investment portfolio are initially recognised in the Consolidated Balance Sheet
at\u00a0cost. Goodwill arising on the acquisition of these associates or joint ventures is included within the carrying value of those investments.
Their carrying amount is increased or decreased to reflect the Group\u2019s share of total comprehensive income after the date of the acquisition.
Where the carrying amount of an associate or joint venture is greater than its estimated recoverable amount, which is the higher of the assets
fair value less costs of disposal and value in use, it is written down immediately to its recoverable amount, with an impairment loss
recognised in the Consolidated Income Statement.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociatesAndJointVenturesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-594": { "value": "
Insurance contracts
Long term insurance contracts \u2013 initial measurement
Insurance contracts are contracts which transfer significant insurance risk to the insurer at the inception of the contract. This is the case if
and\u00a0only if, an insured event could cause an insurer to make significant additional payments in any scenario, other than a scenario which
lacks commercial substance. Such contracts remain insurance contracts until all rights and obligations are extinguished or expired.
At inception, the Group separates the following components from an insurance or reinsurance contract and accounts for them as if they
were stand-alone financial instruments:
\u2022 derivatives embedded in the contract whose economic characteristics and risks are not closely related to those of the host contract
and\u00a0whose\u00a0terms would not meet the definition of an insurance or reinsurance contract as a stand-alone instrument
\u2022 distinct investment components, i.e. investment components that are not highly inter-related with the insurance components and for
which contracts with equivalent terms are sold, or could be sold, separately in the same market or the same jurisdiction.
After separating any financial instrument components, the Group separates any promises to transfer to policyholders distinct goods or
services other than insurance coverage and investment services and accounts for them as separate contracts with customers (i.e. not as
insurance contracts).
A good or service is distinct if the policyholder can benefit from it either on its own or with other resources that are readily available to\u00a0
the policyholder. A good or service is not distinct and is accounted for together with the insurance component if the cash flows and risks
associated with the good or service are highly inter-related with the cash flows and risks associated with the insurance component and
the Group\u00a0provides a significant service of integrating the good or service with the insurance component.
Recognition and level of aggregation
An insurance contract is recognised at the earliest of the following:
(a) the beginning of the coverage period
(b) the date when the first payment from a policyholder becomes due
(c) for onerous contracts, when the contract becomes onerous.
The level of aggregation determines the unit of account at which IFRS 17 calculations are performed. This is determined firstly by dividing
the business written into portfolios. Portfolios comprise groups of contracts with similar risks which are managed together. Portfolios are
further divided based on expected profitability at inception into three categories: onerous contracts, contracts with no significant risk of
subsequently becoming onerous and the remainder. IFRS 17 also requires that no group for level of aggregation purposes may contain
contracts issued more than one year apart. The insurance contract disclosures have been aggregated at the level of the major product
lines of the business, annuities and protection. This disaggregation reflects their similar main characteristics and avoids the presentation
of insignificant detail.
All of the Group\u2019s in scope insurance contracts are accounted for under the general measurement model which measures a group of
insurance contracts as the total of:
\u2022 fulfilment cash flows
\u2022 CSM representing the unearned profit the Group will recognise as it provides services under the insurance\u00a0contract.
Fulfilment cash flows
Fulfilment cash flows comprise unbiased and probability-weighted estimates of future cash flows, discounted to present value to reflect the
time value of money and financial risks, plus a risk adjustment for non-financial risk. The Group\u2019s objective in estimating future cash flows is
to determine the expected value, or the probability weighted mean, of the full range of possible outcomes, considering all reasonable and
supportable information available at the reporting date without undue cost or effort. The Group estimates future cash flows considering a
range of scenarios which have commercial substance and give a good representation of possible outcomes. The cash flows from each
scenario are probability-weighted and discounted using current assumptions.
When estimating future cash flows, the Group includes all cash flows that are within the contract boundary. The cash flows include:
\u2022 premiums and related cash flows
\u2022 claims and benefits, including reported claims not yet paid, incurred claims not yet reported and expected future claims
\u2022 investment management costs incurred in the provision of an investment return service or to enhance the benefits of an insurance contract
\u2022 payments to policyholders resulting from embedded surrender value options
\u2022 an allocation of insurance acquisition cash flows attributable to the portfolio to which the contract belongs
\u2022 claims handling costs
\u2022 policy administration and maintenance costs, including recurring commissions that are expected to be paid to intermediaries for future services
\u2022 an allocation of fixed and variable overheads directly attributable to fulfilling insurance contracts
\u2022 transaction-based taxes.
The Group incorporates, in an unbiased way, all reasonable and supportable information available without undue cost or effort about the
amount, timing and uncertainty of those future cash flows. The Group estimates the probabilities and amounts of future payments under
existing contracts based on information obtained, including:
\u2022 information about claims already reported by policyholders
\u2022 other information about the known or estimated characteristics of the insurance contracts
\u2022 historical data about the Group\u2019s own experience, supplemented when necessary, with data from other sources (historical data is adjusted
to\u00a0reflect current conditions)
\u2022 current pricing information, when available.
The measurement of fulfilment cash flows includes insurance acquisition cash flows which are allocated as a portion of premium to profit
or loss (through insurance revenue) over the period of the contract.
Pre-recognition, insurance acquisition cash flow assets are recognised on the balance sheet prior to allocation to new insurance contracts
and are considered for impairment at each reporting date.
Risk adjustment
The risk adjustment for non-financial risk for a group of insurance contracts reflects the compensation that the Group would require for
bearing uncertainty about the amount and timing of the cash flows that arises from non-financial risk after diversification. The Group\u2019s risk
adjustment is calibrated using a Value at Risk (VAR) methodology. In some cases, the compensation for risk on reinsured business is linked
directly to the price paid for reinsurance.
Discounting
The insurance contract fulfilment cash flows are discounted at rates that reflect the characteristics of the insurance contract liabilities.
These\u00a0are\u00a0determined by starting from an appropriate asset portfolio with deductions to remove risks in the assets that are not present
in\u00a0the\u00a0insurance liabilities.
Contractual service margin (CSM)
The Group\u2019s CSM is a component of the asset or liability for the group of insurance contracts that represents the unearned profit the Group
will\u00a0recognise as it provides services in the future. The Group measures the CSM on initial recognition at an amount that, unless the group
of\u00a0contracts is onerous, results in no income or expenses arising from:
\u2022 initial recognition of the fulfilment cash flows
\u2022 any cash flows arising from the contracts in the Group at that date
\u2022 the derecognition at the date of initial recognition of:
\u2013 any asset for insurance acquisition cash flows
\u2013 any other asset or liability previously recognised related to the group of insurance contracts.
Onerous contracts
For groups of contracts assessed as onerous, the Group recognises a loss in profit or loss for the net outflow, resulting in the carrying amount
of\u00a0the liability for the Group being equal to the fulfilment cash flows and the CSM of the Group being zero. A loss component is established
by the\u00a0Group for the liability for remaining coverage for an onerous group, which represents the losses recognised.
Reinsurance contracts \u2013 initial measurement
The initial measurement of reinsurance contracts held follows the same principles as those for insurance contracts issued, with the exception
of\u00a0the following:
\u2022 reinsurance contracts are recognised from the earlier of the following:
\u2013 the beginning of the coverage period
\u2013 the date the entity recognises an onerous group of underlying insurance contracts, if the entity entered into the related reinsurance
contract\u00a0held in the group of reinsurance contracts held at or before that date.
\u2022 measurement of the cash flows includes an allowance on a probability-weighted basis for the effect of any non-performance by the
reinsurers, including the effects of collateral and losses from disputes
\u2022 the Group determines the risk adjustment for non-financial risk so that it represents the amount of risk being transferred to the reinsurer
\u2022 both day one gains and day one losses are not recognised at initial recognition in the statement of financial position but are deferred into
the\u00a0CSM and released to profit or loss as the reinsurer renders services, except for any portion of a day 1 loss that relates to events before
initial\u00a0recognition
\u2022 if the reinsurance contract is recognised prior to a loss-making underlying contract, the reinsurance CSM can be adjusted to offset a portion of
the inception loss (the loss recovery component). This offsets a portion of the loss recognised on inception of the underlying onerous contract.
Long term insurance contracts \u2013 subsequent measurement
The Group measures the carrying amount of a group of insurance contracts at the end of each reporting period as the sum of:
(i) the liability for remaining coverage comprising fulfilment cash flows related to future service allocated to the Group at that date and the
CSM of the Group at that date
(ii) the liability for incurred claims for the Group reflecting the fulfilment cash flows related to past service allocated to the Group at that date.
Contractual service margin \u2013 measurement
The CSM at the end of the reporting period represents the profit in the group of insurance contracts that has not yet been recognised
in profit or loss, because it relates to future service to be provided.
For a group of insurance contracts the carrying amount of the CSM of that group at the end of the reporting period equals the carrying
amount at\u00a0the beginning of the reporting period adjusted for:
\u2022 the effect of any new contracts added
\u2022 interest accreted on the carrying amount of the CSM during the reporting period, measured at the discount rates at initial recognition
\u2022 changes in fulfilment cash flows relating to future service, except to the extent that:
\u2013 such increases in the fulfilment cash flows exceed the current carrying amount of the CSM, giving rise to a loss; or
\u2013 such decreases in the fulfilment cash flows are allocated to the loss component of the liability for remaining coverage
\u2022 the amount recognised as insurance revenue because of the transfer of services in the period, determined by allocation of the CSM
at the end of the period over the current and remaining coverage period
\u2022 the effect of any currency exchange differences on the CSM.
The changes in fulfilment cash flows relating to future service that adjust the CSM comprise:
\u2022 experience adjustments that arise from the difference between the premium receipts (net of refunds) and any related cash flows such as
insurance acquisition cash flows and insurance premium taxes and the estimate, at the beginning of the period, of the amounts expected.
Differences related to premiums received (or due) in respect of current or past services are recognised immediately in profit or loss while
differences related to premiums received (or due) for future services are adjusted in the CSM
\u2022 changes in estimates of the present value of future cash flows in the liability for remaining coverage, except those relating to the time value
of\u00a0money and changes in financial risk (which are instead recognised in the statement of profit or loss and other comprehensive income)
\u2022 differences between any investment component expected to become payable in the period and the actual investment component that
becomes payable in the period
\u2022 changes in the risk adjustment for non-financial risk that relate to future service.
Adjustments to the CSM noted above are measured at discount rates that reflect the characteristics of the cash flows of the group of
insurance contracts at initial recognition (i.e. the weighted average of the rates applicable at the date of initial recognition of contracts
that joined a group over a 12-month period).
Onerous contracts
Groups of contracts that were not onerous at initial recognition can subsequently become onerous if assumptions and experience extinguish
the CSM. In this case, the Group establishes a loss component for the future losses recognised. The loss component is released based on
a systematic allocation of the subsequent changes in the fulfilment cash flows to: (i) the loss component; and (ii) the liability for remaining
coverage excluding the loss component. The loss component is also updated for subsequent changes in estimates of the fulfilment cash
flows related to future service. The systematic allocation of subsequent changes to the loss component results in the total amounts allocated
to the loss component being equal to zero by the end of the coverage period of a group of contracts (since the loss component will have
materialised in the form of incurred claims). The loss component ensures that over the duration of the contract, the correct amounts are
recognised as insurance revenue and insurance service expenses.
Contractual service margin (CSM) \u2013 recognition
The amount of CSM recognised in the income statement for a group of insurance contracts reflects the insurance contract services provided.
The proportion of the CSM earned is calculated as the amount of coverage units provided in the period divided by the sum of\u00a0all\u00a0the future and
current period coverage units. The Group has elected to discount the future coverage units in this calculation. The table below\u00a0indicates the main
insurance contracts services provided under the Group\u2019s insurance contracts and selected coverage unit(s) used to\u00a0measure those services.
Insurance contract
Insurance service
Coverage unit(s)
Immediate annuity
Payment of insurance claims
Expected annual claims payments
Deferred annuity
Payment of insurance claims (payment phase)
Investment return service (deferral phase)
Lump sum death benefits (deferral phase)
Expected annual claims payments
Expected investment return on backing assets
Sum assured
Longevity swaps
Payment of floating leg of swap
Expected annual floating leg payments
Retail Protection
Potential mortality or morbidity claims
Sum assured
Group Protection
Potential mortality or morbidity claims
Sum assured
Where a specific unit of account contains a mixture of services and therefore coverage units, it is necessary to weight the coverage units so
that the resulting profile of CSM release reflects the overall package of benefits provided. This is particularly pertinent to units of account
incorporating a combination of immediate and deferred annuities. Under IFRS 17, deferred annuities usually provide multiple services, split
between the two phases of benefit provision (the deferral phase and the payment phase). Judgement is therefore required to combine the
different coverage units so that they fairly reflect the services provided. The weighting between the deferral phase and the payment phase
coverage units is calculated so that the services provided in the deferral phase reflect the investment return provided and the probability
weighted delivery of any lump sum death benefits, both adjusted so that all of the CSM is earned in the deferral phase for all contracts
which do not enter the payment phase either through transfer out, withdrawal of funds or death.
Investment components
The Group identifies the investment component of a contract by determining the amount that it would be required to repay to the policyholder
in all scenarios with commercial substance. Investment components are not included in insurance revenue and insurance service expenses.
Insurance finance income and expense
Insurance finance income and expenses comprise changes in the carrying amounts of groups of insurance contracts arising from the effects
of the time value of money, financial risk and changes therein. IFRS 17 requires an accounting policy decision as to whether to recognise all
finance income or expense in profit or loss, or whether to disaggregate the income or expense that relates to changes in financial assumptions into
other comprehensive income. Finance income and expense has been included in profit or loss for all insurance products except for the
Group\u2019s protection business where it has been disaggregated between profit and loss and other comprehensive income. Where insurance
finance income and expense has been disaggregated the amount included in profit or loss is determined by a systematic allocation of the
expected total insurance finance income or expenses over the duration of the group of contracts, using the discount rates determined on
initial recognition.
Changes in the risk adjustment for non-financial risk have been disaggregated between insurance service result and insurance finance
income and expenses.
Reinsurance contracts held \u2013 subsequent measurement
The subsequent measurement of reinsurance contracts held follows the same principles as those for insurance contracts issued except that
changes in the fulfilment cash flows are recognised in profit or loss if the related changes arising from the underlying ceded contracts are
recognised in profit or loss.
Derecognition and contract modification of insurance contracts
The Group derecognises a contract when it is extinguished, i.e. when the specified obligations in the contract expire or are discharged
or cancelled.
The Group also derecognises a contract if its terms are modified in a way that would have changed the accounting for the contract
significantly had the new terms always existed, in which case a new contract based on the modified terms is recognised. If a contract
modification does not\u00a0result in derecognition, then the Group treats the changes in cash flows caused by the modification as changes
in estimates of fulfilment cash\u00a0flows.
Measurement on transition to IFRS 17
On transition to IFRS 17, the insurance contract liabilities were restated, retrospectively applying the Group\u2019s accounting policies. In line with
the provisions available in IFRS 17, the Group applied the full retrospective approach unless impracticable. The full retrospective approach
required the Group to:
\u2022 identify, recognise and measure each group of insurance and reinsurance contracts as if IFRS 17 had always applied
\u2022 derecognise any existing balances that would not exist had IFRS 17 always applied
\u2022 recognise any resulting net difference in equity.
If it was impracticable to apply a full retrospective approach to a group of contracts then the Group selected an approach between the
modified retrospective approach and the fair value approach. If the Group could not obtain reasonable and supportable information
necessary to apply the\u00a0modified retrospective approach, then the fair value approach was selected.
Full retrospective approach
For insurance and reinsurance contracts where the full retrospective approach was adopted, the best estimate and risk adjustment components
of fulfilment cash flows were recognised and measured using the Group\u2019s accounting policies from the inception date of the contracts to the
date of transition. The full retrospective approach was determined to be impracticable where: the effects of retrospective application were not
determinable because information required was not collected (or not with sufficient granularity);`application would require the application of
hindsight; or information was unavailable because of system migrations, data retention requirements or other reasons.
Modified retrospective approach
The objective of the modified retrospective approach is to achieve the closest outcome to retrospective application possible using reasonable
and\u00a0supportable information available without undue cost or effort. For insurance and reinsurance contracts where the modified retrospective
approach has been adopted, the best estimate and risk adjustment components of fulfilment cash flows were recognised and measured
using the Group\u2019s accounting policies at the date of transition except for the application of a permitted transition modification that, for some
groups of contracts issued before 1 January 2021, the risk adjustment for non-financial risk on initial recognition was determined by adjusting
the amount at\u00a01 January 2022 for the expected release of risk before that date. The expected release was determined with reference to the
release of risk of similar contracts that the Group issued in 2022. This modification was used to avoid the application of hindsight to the
calibration of the risk adjustment in prior periods.
Fair value approach
For insurance and reinsurance contracts where the fair value approach has been adopted, the best estimate and risk adjustment components
of\u00a0fulfilment cash flows were determined as at 1 January 2022. The Group determined the contractual service margin (CSM) of the liability
for remaining coverage at the transition date, as the difference between the fair value of the group of insurance contracts and the fulfilment
cash flows measured at that date. In determining fair value, the Group applied the requirements of IFRS 13, \u2018Fair Value Measurement\u2019, except
for the demand deposit floor requirement.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInsuranceContracts", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-595": { "value": "
Reinsurance contracts \u2013 initial measurement
The initial measurement of reinsurance contracts held follows the same principles as those for insurance contracts issued, with the exception
of\u00a0the following:
\u2022 reinsurance contracts are recognised from the earlier of the following:
\u2013 the beginning of the coverage period
\u2013 the date the entity recognises an onerous group of underlying insurance contracts, if the entity entered into the related reinsurance
contract\u00a0held in the group of reinsurance contracts held at or before that date.
\u2022 measurement of the cash flows includes an allowance on a probability-weighted basis for the effect of any non-performance by the
reinsurers, including the effects of collateral and losses from disputes
\u2022 the Group determines the risk adjustment for non-financial risk so that it represents the amount of risk being transferred to the reinsurer
\u2022 both day one gains and day one losses are not recognised at initial recognition in the statement of financial position but are deferred into
the\u00a0CSM and released to profit or loss as the reinsurer renders services, except for any portion of a day 1 loss that relates to events before
initial\u00a0recognition
\u2022 if the reinsurance contract is recognised prior to a loss-making underlying contract, the reinsurance CSM can be adjusted to offset a portion of
the inception loss (the loss recovery component). This offsets a portion of the loss recognised on inception of the underlying onerous contract.
Long term insurance contracts \u2013 subsequent measurement
The Group measures the carrying amount of a group of insurance contracts at the end of each reporting period as the sum of:
(i) the liability for remaining coverage comprising fulfilment cash flows related to future service allocated to the Group at that date and the
CSM of the Group at that date
(ii) the liability for incurred claims for the Group reflecting the fulfilment cash flows related to past service allocated to the Group at that date.
Contractual service margin \u2013 measurement
The CSM at the end of the reporting period represents the profit in the group of insurance contracts that has not yet been recognised
in profit or loss, because it relates to future service to be provided.
For a group of insurance contracts the carrying amount of the CSM of that group at the end of the reporting period equals the carrying
amount at\u00a0the beginning of the reporting period adjusted for:
\u2022 the effect of any new contracts added
\u2022 interest accreted on the carrying amount of the CSM during the reporting period, measured at the discount rates at initial recognition
\u2022 changes in fulfilment cash flows relating to future service, except to the extent that:
\u2013 such increases in the fulfilment cash flows exceed the current carrying amount of the CSM, giving rise to a loss; or
\u2013 such decreases in the fulfilment cash flows are allocated to the loss component of the liability for remaining coverage
\u2022 the amount recognised as insurance revenue because of the transfer of services in the period, determined by allocation of the CSM
at the end of the period over the current and remaining coverage period
\u2022 the effect of any currency exchange differences on the CSM.
The changes in fulfilment cash flows relating to future service that adjust the CSM comprise:
\u2022 experience adjustments that arise from the difference between the premium receipts (net of refunds) and any related cash flows such as
insurance acquisition cash flows and insurance premium taxes and the estimate, at the beginning of the period, of the amounts expected.
Differences related to premiums received (or due) in respect of current or past services are recognised immediately in profit or loss while
differences related to premiums received (or due) for future services are adjusted in the CSM
\u2022 changes in estimates of the present value of future cash flows in the liability for remaining coverage, except those relating to the time value
of\u00a0money and changes in financial risk (which are instead recognised in the statement of profit or loss and other comprehensive income)
\u2022 differences between any investment component expected to become payable in the period and the actual investment component that
becomes payable in the period
\u2022 changes in the risk adjustment for non-financial risk that relate to future service.
Adjustments to the CSM noted above are measured at discount rates that reflect the characteristics of the cash flows of the group of
insurance contracts at initial recognition (i.e. the weighted average of the rates applicable at the date of initial recognition of contracts
that joined a group over a 12-month period).
Onerous contracts
Groups of contracts that were not onerous at initial recognition can subsequently become onerous if assumptions and experience extinguish
the CSM. In this case, the Group establishes a loss component for the future losses recognised. The loss component is released based on
a systematic allocation of the subsequent changes in the fulfilment cash flows to: (i) the loss component; and (ii) the liability for remaining
coverage excluding the loss component. The loss component is also updated for subsequent changes in estimates of the fulfilment cash
flows related to future service. The systematic allocation of subsequent changes to the loss component results in the total amounts allocated
to the loss component being equal to zero by the end of the coverage period of a group of contracts (since the loss component will have
materialised in the form of incurred claims). The loss component ensures that over the duration of the contract, the correct amounts are
recognised as insurance revenue and insurance service expenses.
Contractual service margin (CSM) \u2013 recognition
The amount of CSM recognised in the income statement for a group of insurance contracts reflects the insurance contract services provided.
The proportion of the CSM earned is calculated as the amount of coverage units provided in the period divided by the sum of\u00a0all\u00a0the future and
current period coverage units. The Group has elected to discount the future coverage units in this calculation. The table below\u00a0indicates the main
insurance contracts services provided under the Group\u2019s insurance contracts and selected coverage unit(s) used to\u00a0measure those services.
Insurance contract
Insurance service
Coverage unit(s)
Immediate annuity
Payment of insurance claims
Expected annual claims payments
Deferred annuity
Payment of insurance claims (payment phase)
Investment return service (deferral phase)
Lump sum death benefits (deferral phase)
Expected annual claims payments
Expected investment return on backing assets
Sum assured
Longevity swaps
Payment of floating leg of swap
Expected annual floating leg payments
Retail Protection
Potential mortality or morbidity claims
Sum assured
Group Protection
Potential mortality or morbidity claims
Sum assured
Where a specific unit of account contains a mixture of services and therefore coverage units, it is necessary to weight the coverage units so
that the resulting profile of CSM release reflects the overall package of benefits provided. This is particularly pertinent to units of account
incorporating a combination of immediate and deferred annuities. Under IFRS 17, deferred annuities usually provide multiple services, split
between the two phases of benefit provision (the deferral phase and the payment phase). Judgement is therefore required to combine the
different coverage units so that they fairly reflect the services provided. The weighting between the deferral phase and the payment phase
coverage units is calculated so that the services provided in the deferral phase reflect the investment return provided and the probability
weighted delivery of any lump sum death benefits, both adjusted so that all of the CSM is earned in the deferral phase for all contracts
which do not enter the payment phase either through transfer out, withdrawal of funds or death.
Investment components
The Group identifies the investment component of a contract by determining the amount that it would be required to repay to the policyholder
in all scenarios with commercial substance. Investment components are not included in insurance revenue and insurance service expenses.
Insurance finance income and expense
Insurance finance income and expenses comprise changes in the carrying amounts of groups of insurance contracts arising from the effects
of the time value of money, financial risk and changes therein. IFRS 17 requires an accounting policy decision as to whether to recognise all
finance income or expense in profit or loss, or whether to disaggregate the income or expense that relates to changes in financial assumptions into
other comprehensive income. Finance income and expense has been included in profit or loss for all insurance products except for the
Group\u2019s protection business where it has been disaggregated between profit and loss and other comprehensive income. Where insurance
finance income and expense has been disaggregated the amount included in profit or loss is determined by a systematic allocation of the
expected total insurance finance income or expenses over the duration of the group of contracts, using the discount rates determined on
initial recognition.
Changes in the risk adjustment for non-financial risk have been disaggregated between insurance service result and insurance finance
income and expenses.
Reinsurance contracts held \u2013 subsequent measurement
The subsequent measurement of reinsurance contracts held follows the same principles as those for insurance contracts issued except that
changes in the fulfilment cash flows are recognised in profit or loss if the related changes arising from the underlying ceded contracts are
recognised in profit or loss.
Derecognition and contract modification of insurance contracts
The Group derecognises a contract when it is extinguished, i.e. when the specified obligations in the contract expire or are discharged
or cancelled.
Full retrospective approach
For insurance and reinsurance contracts where the full retrospective approach was adopted, the best estimate and risk adjustment components
of fulfilment cash flows were recognised and measured using the Group\u2019s accounting policies from the inception date of the contracts to the
date of transition. The full retrospective approach was determined to be impracticable where: the effects of retrospective application were not
determinable because information required was not collected (or not with sufficient granularity);`application would require the application of
hindsight; or information was unavailable because of system migrations, data retention requirements or other reasons.
Modified retrospective approach
The objective of the modified retrospective approach is to achieve the closest outcome to retrospective application possible using reasonable
and\u00a0supportable information available without undue cost or effort. For insurance and reinsurance contracts where the modified retrospective
approach has been adopted, the best estimate and risk adjustment components of fulfilment cash flows were recognised and measured
using the Group\u2019s accounting policies at the date of transition except for the application of a permitted transition modification that, for some
groups of contracts issued before 1 January 2021, the risk adjustment for non-financial risk on initial recognition was determined by adjusting
the amount at\u00a01 January 2022 for the expected release of risk before that date. The expected release was determined with reference to the
release of risk of similar contracts that the Group issued in 2022. This modification was used to avoid the application of hindsight to the
calibration of the risk adjustment in prior periods.
Fair value approach
For insurance and reinsurance contracts where the fair value approach has been adopted, the best estimate and risk adjustment components
of\u00a0fulfilment cash flows were determined as at 1 January 2022. The Group determined the contractual service margin (CSM) of the liability
for remaining coverage at the transition date, as the difference between the fair value of the group of insurance contracts and the fulfilment
cash flows measured at that date. In determining fair value, the Group applied the requirements of IFRS 13, \u2018Fair Value Measurement\u2019, except
for the demand deposit floor requirement.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForReinsuranceExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-596": { "value": "
Financial instruments
Recognition and derecognition
Initial recognition of financial assets and liabilities is on the trade date, which is the date on which the Group becomes a party to the
contractual provisions of the instrument. A financial asset or financial liability is initially measured at fair value plus, for a financial asset or
financial liability not\u00a0measured at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issue.
When the fair value of\u00a0financial assets and liabilities differs from the transaction price on initial recognition, the Group recognises the
difference as follows:
\u2022 when the fair value is evidenced by a quoted price in an active market for an identical asset or liability (i.e. a Level 1 input) or based
on\u00a0a\u00a0valuation technique that uses only data from observable markets, the difference is recognised as a gain or loss
\u2022 in all other cases, the difference is deferred and the timing of recognition of deferred day one profit or loss is determined individually.
It is either amortised over the life of the instrument, deferred until the instrument\u2019s fair value can be determined using market observable
inputs or realised through settlement.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when the Group transfers
substantially all the risks and rewards of ownership to another entity. This is the case for cash collateral pledged, where the counterparty
has contractual rights to receive the cash flows generated and which is derecognised from the Consolidated Balance Sheet and a
corresponding receivable recognised for its return.
The Group enters into transactions whereby it transfers assets recognised in its Consolidated Balance Sheet, but retains either all or
substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognised. Examples
of such transactions are repurchase agreements and non-cash collateral pledged, unless the Group defaults on its obligations under the
relevant agreement.
In transactions in which the Group neither retains nor transfers substantially all of the risks and rewards of ownership of a financial asset
and it retains control over the asset, the Group continues to recognise the asset to the extent of its continuing involvement, determined
by the extent to\u00a0which it is exposed to changes in the value of the transferred asset.
The Group derecognises a financial liability when its contractual obligations expire or are discharged or cancelled. The Group also
derecognises a\u00a0financial liability when its terms are modified and the cash flows of the modified liability are substantially different,
in which case a new financial liability based on the modified terms is recognised at fair value.
On derecognition of a financial asset or financial liability, the difference between the carrying amount at the date of derecognition and the
consideration received (including any new asset obtained less any new liability assumed) is recognised in profit or loss.
Modification
If the terms of a financial asset are modified, then the Group evaluates whether the cash flows of the modified asset are substantially
different. If\u00a0the cash flows are substantially different, then the contractual rights to cash flows from the original financial asset are deemed
to have expired. In this case, the original financial asset is derecognised and a new financial asset is recognised at fair value plus any eligible
transaction costs.
Classification and measurement of financial assets
The Group classifies its financial assets on initial recognition as measured at amortised cost, fair value through other comprehensive income
(FVOCI) and fair value through profit or loss (FVTPL).
The classification and measurement of financial assets depends on their contractual cash flow characteristics and how they are managed
(the entity\u2019s business model). The contractual cash flow characteristics test aims to identify those assets with cash flows consistent with a
basic lending arrangement, i.e. which are \u2018solely payments of principal and interest\u2019 (SPPI). The business model test refers to how an entity
manages its financial assets with the objectives of generating cash flows. These factors determine whether the financial assets are measured
at amortised cost, FVOCI or FVTPL. Assets are therefore typically characterised as follows:
\u2022 amortised cost: financial assets with contractual terms that give rise solely to interest and principal cash flows and which are held in a
business model whose objective is to hold the assets to collect their cash flows. They are measured at amortised cost using the effective
interest method. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on
derecognition is also recognised in profit or loss
\u2022 FVOCI: financial assets with contractual terms that give rise solely to interest and principal cash flows and which are held in a business
model whose objective is achieved by holding the assets to collect their cash flows and selling them. Interest income calculated using the
effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses
are recognised in other comprehensive income. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss
\u2022 FVTPL: all other financial assets. Net gains and losses, including any interest or dividend income and foreign exchange gains and losses,
are\u00a0recognised in profit or loss, unless they arise from derivatives designated as hedging instruments in cash flow or net investment hedges.
Notwithstanding the above, on initial recognition the Group may irrevocably designate to FVTPL a financial asset that would otherwise be
measured at amortised cost or FVOCI if doing so eliminates or greatly reduces an accounting mismatch.
In making the SPPI assessment, the Group considers whether the contractual cash flows are consistent with a basic lending arrangement (that
is, interest includes only consideration for the time value of money, credit risk, other basic lending risks and a profit margin that is consistent with
a basic lending arrangement). This includes evaluating whether the financial asset contains a contractual term that could change the timing or
amount of contractual cash flows such that it would not meet this condition. Examples of such contractual terms to be considered are contingent
events that would change the amount or timing of cash flows, leverage features, prepayment and extension features, non-recourse asset
arrangements and features that modify consideration for the time value of money (e.g. periodic reset of interest rates).
The business model reflects how the Group manages assets in order to generate cash flows, i.e. it reflects whether the Group\u2019s objective
is solely to collect the contractual cash flows from assets or to collect both the contractual cash flows and cash flows arising from the sale
of assets. If neither of these is applicable (for example, financial assets are held for trading purposes), the business model is \u2018other\u2019 and the
financial asset is measured at FVTPL. Factors considered by the Group in determining the business model for a group of assets include past
experience on how the cash flows for these assets were collected, how the asset\u2019s performance is evaluated and reported to key
management personnel, how risks are assessed and managed and how managers are compensated.
The objective of the Group\u2019s business model for certain debt instruments, in particular those instruments backing annuity or investment
contract liabilities, including surplus assets, is to fund its liabilities. Consistent with the Group\u2019s investment strategy their performance is
evaluated on a total return basis, as significant buying and selling activity is undertaken on a regular basis to rebalance its portfolio and
to ensure that contractual cash flows from those assets are sufficient to settle the underlying liabilities. These investments do not follow a
\u2018held to collect\u2019 or \u2018held to collect and sell\u2019 business model and are therefore accounted for at FVTPL. This business model is also applicable
to reverse repurchase agreements and to derivatives. Equity instruments are accounted for at FVTPL.
Certain debt securities are held in separate portfolios for long-term yield. These include long-dated debt instruments backing annuities
liabilities, but in surplus to the IFRS 17 best estimate liability and risk adjustment, used to manage interest and inflation rate exposure, as
well as assets backing protection liabilities. These assets represent instruments consistent with the SPPI principles and are accounted for
at amortised cost or\u00a0FVOCI depending on the expected level of trading.
Receivables are accounted for at amortised cost.
Classification and measurement of financial liabilities
The Group classifies and subsequently measures financial liabilities at amortised cost or FVTPL.
Investment contract liabilities
Investment contract liabilities are measured at FVTPL. This is because these liabilities, as well as the related assets, are managed and their
performance evaluated on a fair value basis. For unit linked liabilities, fair value is determined by reference to the value of the underlying net
asset values of the Group\u2019s unitised investment funds at the balance sheet date.
Core and operational borrowings
Borrowings are recognised initially at fair value, net of transaction costs. Borrowings are subsequently stated at amortised cost. The
difference between the net proceeds and the redemption value is recognised in the income statement over the borrowing period using
the effective interest rate method.
Other financial liabilities
Other financial liabilities include derivative liabilities, repurchase agreements and trail commission, which are measured at FVTPL, while
other payable balances are measured at amortised cost.
Derivatives
Derivatives are initially recognised at fair value on the date on which the derivative contract is entered into. The Group\u2019s derivatives, other
than those designated as hedging instruments in cash flow or net investment hedges, are instruments held for trading and, are therefore
accounted for\u00a0at FVTPL.
Derivatives may be embedded in another contractual arrangement. If such a hybrid contract contains a host that is a financial asset, the
Group assesses the entire contract for classification and measurement purposes. Otherwise, the Group accounts for an embedded derivative
separately from the host contract when:
\u2022 its economic characteristics and risks are not closely related to those of the host contract
\u2022 the terms of the embedded derivative would have met the definition of a derivative if they were contained in a separate contract
\u2022 the hybrid contract is not measured at FVTPL.
These embedded derivatives are separately accounted for at FVTPL, unless the Group chooses to designate the entire hybrid contract at FVTPL.
A derivative embedded in a host insurance or reinsurance contract is not accounted for separately from the host contract if the embedded
derivative itself meets the definition of an insurance or reinsurance contract.
Collateral
Collateral received in the form of cash, which is not legally segregated from the Group, is recognised as an asset in the Consolidated Balance
Sheet with a corresponding liability for the repayment in Payables and other financial liabilities. However, where the Group has a currently
enforceable legal right of set-off and the ability and intent to net settle, the collateral liability and associated derivative balances are shown net.
Non-cash collateral received is not recognised in the Consolidated Balance Sheet unless the transfer of the collateral meets the derecognition
criteria from the perspective of the transferor. Such collateral is typically recognised when the Group either: (a) sells or repledges these assets
in the absence of default, at which point the obligation to return this collateral is recognised as a liability; or (b) the counterparty to the
arrangement defaults, at which point the collateral is seized and recognised as an asset.
Collateral pledged in the form of cash, which is legally segregated from the Group, is derecognised from the statement of financial position
with a\u00a0corresponding receivable recognised for its return. Non-cash collateral pledged is not derecognised from the statement of financial
position unless the Group defaults on its obligations under the relevant agreement and therefore continues to be recognised in the
Consolidated Balance Sheet within Financial investments.
Impairment of financial assets
The Group assesses on a forward-looking basis the expected credit loss (ECL) associated with its financial assets measured at amortised
cost and FVOCI and recognises a loss allowance for such losses at each reporting date. Expected credit losses are defined as the present
value of the difference between all contractual cash flows that are due and all cash flows that the entity expects to receive (i.e. the cash
shortfall), weighted based on their probability of occurrence. The loss allowance recognised under IFRS 9 can be equal to an amount
corresponding to a 12-month ECL or a lifetime ECL. A lifetime ECL is the ECL resulting from all possible default events over the expected
life of the financial asset; a 12-month ECL is the portion of lifetime ECL resulting from default events on a financial asset that are possible
within the 12 months after the reporting date. For a financial asset that is credit-impaired at the reporting date, but that is not a purchased or
originated credit-impaired financial asset, expected credit losses are measured as the difference between the asset\u2019s gross carrying amount
and the present value of estimated future cash flows, discounted at the financial asset\u2019s original effective interest rate. Any adjustment is
recognised in profit or loss as an impairment gain or loss.
The Group defines default on a financial asset as the inability to meet in full and on time an original promise of expected cash flows,
the amount and timing of which are defined with certainty. Any breach of this promise, by any amount or time (in excess of any potential
planned grace period), constitutes a default. This is consistent with the definition of default used for internal credit risk management
purposes. An asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of
that financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable data:
\u2022 significant financial difficulty of the borrower
\u2022 a breach of contract, such as a default or past due event
\u2022 the restructure of a loan by the Group on terms which it would not otherwise consider
\u2022 it becomes probable that the borrower will enter bankruptcy or other financial reorganisation.
A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.
The ECL model is run from the date of initial recognition of a financial asset and its output updated at every reporting period, even if no actual
loss events have taken place. The impact of updating the inputs of the ECL model in the reporting period is recognised in profit or loss directly
where it affects the carrying value of financial assets at amortised cost, while for assets at FVOCI an equal and opposite movement is
recorded in other comprehensive income.
In order to determine whether the Group measures ECLs at an amount equal to 12-month ECL or lifetime ECL, at each reporting period
the Group is required to assess which \u2018stage\u2019 a financial asset falls into. Stages reflect the general pattern of deterioration in credit risk
of a financial instrument that ultimately defaults, as follows:
\u2022 Stage 1 includes financially healthy financial assets that are expected to perform in line with their contractual terms and which have
no signs of\u00a0increased credit risk
\u2022 Stage 2 includes financial assets for which a significant increase in credit risk has occurred since initial recognition, but which are not
credit-impaired
\u2022 Stage 3 applies to credit-impaired financial instruments.
When financial assets are under Stage 1, 12-month ECLs are recognised. When financial assets are under Stage 2 or 3, lifetime ECLs are
recognised. An instrument moves down (or up) the stages when a significant increase in credit risk (SICR) has happened (or has reversed).
When determining whether the credit risk of a financial instrument has increased significantly since initial recognition, the Group considers
reasonable and supportable information, both qualitative and quantitative, that is relevant and is available without undue cost or effort,
including forward-looking information at its disposal. Key indicators used in order to determine whether a SICR has occurred (either in
isolation or in combination) are:
\u2022 deterioration in rating grade between origination date and reporting date. The level of deterioration required by an individual asset is
determined using a relative rating matrix
\u2022 exposure is identified on the investment managers\u2019 \u2018watchlist\u2019
\u2022 exposure is identified on internal \u2018credit watchlists\u2019
\u2022 a manual shift of an exposure to Stage 2 on an exceptional basis (where required, using management judgement).
The provisions of IFRS 9 include a rebuttable presumption that the credit risk on a financial asset has increased significantly since initial
recognition when contractual payments are more than 30 days past due, which is taken into account for this assessment.
The Group makes use of a practical expedient available in IFRS 9 whereby it can be assumed that the credit risk on a financial instrument
has\u00a0not\u00a0increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date
(e.g.\u00a0investment grade as determined by the Group\u2019s asset managers). This allows recognition of 12-month ECLs as opposed to, potentially,
lifetime ECLs. This is deemed to be the case where assets that have been downgraded remain of good credit quality (i.e. investment grade
as\u00a0determined by the Group\u2019s asset managers) as at the reporting date, to the extent that, where relevant, the Group\u2019s internal credit risk
ratings are considered to be consistent with a globally understood definition of \u2018low credit risk\u2019.
The Group estimates ECLs on its financial investments at amortised cost and debt instruments at FVOCI which are not credit-impaired
by using the probability of default approach. Based on this method, the ECLs are a probability-weighted estimate of the present value of
estimated cash shortfalls, i.e. the weighted average of credit losses, with the respective risks of a default occurring used as the weightings.
For this purpose, the key elements to be calculated are the Probability of Default (PD), i.e. the estimate of the likelihood of default over a
given time horizon (either 12 months or lifetime); the respective Loss Given Default (LGD); and the Exposure at Default (EAD).
Exposures that move into Stage 3 are able to transition back to Stage 2 if the asset no longer meets the definition of default. Similarly,
exposures will re-transition from Stage 2 to Stage 1 where the SICR indicators no longer apply. No separate cure or probation periods are
applied on the basis that assets will not be re-rated or moved out of default until there is evidence of stable and improved performance.
In order to determine 12-month or lifetime PDs the Group\u2019s models utilise historical data obtained from S&P and Moody\u2019s in order to
evaluate transitions (i.e. the probability that a security changes rating in a given year) and defaults, plus scenario-specific annual scaling
factors which adjust the PDs for forward-looking information. The final PDs produced by the model are unconditional, i.e. they incorporate
both the probability of not defaulting until the start of the period and the subsequent probability of default in that period, conditional on the
position not having defaulted to that point. This allows them to be summed over 12 months to provide 12-month PD estimates, or over all
remaining months to produce lifetime PD estimates.
LGD is the magnitude of the likely loss if there is a default, based on the history of recovery rates of claims against defaulted counterparties
and taking into account collateral values where applicable.
EAD represents the expected exposure in the event of a default. The Group estimates LGD based on the history of recovery rates of claims
against defaulted counterparties. Appropriate haircuts are applied to baseline unsecured LGDs and used in conjunction with forecast
collateral values to estimate LGD for assets secured by collateral.
The Group has adopted a simplified approach for trade receivables, contract assets and finance and operating lease receivables. This allows
measurement of lifetime ECLs only, thereby removing the need to identify SICRs. For these balances, the Group makes use of provision
matrices in order to calculate such lifetime ECLs. This is a practical expedient allowed by IFRS 9 whereby historical credit loss experience
and fixed loss rates are applied to the balances outstanding. Historical loss rates are adjusted to allow for forward-looking information.
Hedge accounting
The Group uses hedge accounting, provided the prescribed criteria are met, to recognise the offsetting effects of changes in the fair value
or cash flow of the derivative instrument and the hedged item. Hedge accounting can be applied in order to:
\u2022 hedge the exposure to fair value movements of a recognised asset or liability or an unrecognised firm commitment, or a component
of any such item, that is attributable to a particular risk and could affect the Consolidated Income Statement
\u2022 hedge the exposure to variability in cash flows attributable to a particular risk associated with all, or a component of, a recognised asset
or liability, or a highly probable forecast transaction, that could affect the Consolidated Income Statement
\u2022 hedge the exposure to the currency risk associated with a net investment in a foreign operation.
The relationship between the hedging instrument and the hedged item, together with the risk management objective and strategy for
undertaking the hedge transaction, are documented formally at the inception of the transaction. The documentation includes identification of
the hedging instrument, the hedged item, the nature of the risk being hedged and how the Group will assess whether the hedging relationship
meets the hedge effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the hedge ratio is determined).
A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements:
\u2022 there is an economic relationship between the hedged item and the hedging instrument
\u2022 the effect of credit risk does not dominate the value changes that result from that economic relationship
\u2022 the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually
hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
The effective portion of the gain or loss on the hedging items is recognised in the Consolidated Statement of Comprehensive Income and
in a separate reserve within equity (cash flow hedge). The gain or loss relating to the ineffective portion is recognised immediately in the
Consolidated Income Statement. Amounts accumulated in equity are reclassified in the periods when the hedged item affects profit or loss.
The change in fair value of the hedging instrument related to the basis spread or forward points movements is recognised in a separate
component of equity (cost of hedging reserve) to the extent that it relates to the hedged item (cost of hedging reserve) and expensed on
a systematic and rational basis over the period of the hedge relationship.
Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date.
Fair value measurements are based on observable and unobservable inputs. Observable inputs reflect market data obtained from
independent sources, while unobservable inputs reflect the Group\u2019s view of market assumptions in the absence of observable market
information. The Group utilises techniques that maximise the use of observable inputs and minimise the use of unobservable inputs.
The best evidence of the fair value of a financial instrument at initial recognition is normally the transaction price. In certain circumstances,
the fair value at initial recognition differs from the transaction price. If the fair value is evidenced by comparison by a quoted price in an active
market for an identical instrument, or is based on a valuation technique that uses only data from observable markets, the difference between
the fair value at initial recognition and the transaction price is recognised as a gain or loss in the Consolidated Income Statement. In all other
cases, the difference between the fair value at initial recognition and the transaction price is deferred and recognised in the Consolidated
Income Statement over the life of the instrument to the extent that it arises from a change in a factor (including time) that market participants
would take into account when pricing the instrument.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-597": { "value": "
Recognition and derecognition
Initial recognition of financial assets and liabilities is on the trade date, which is the date on which the Group becomes a party to the
contractual provisions of the instrument. A financial asset or financial liability is initially measured at fair value plus, for a financial asset or
financial liability not\u00a0measured at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issue.
When the fair value of\u00a0financial assets and liabilities differs from the transaction price on initial recognition, the Group recognises the
difference as follows:
\u2022 when the fair value is evidenced by a quoted price in an active market for an identical asset or liability (i.e. a Level 1 input) or based
on\u00a0a\u00a0valuation technique that uses only data from observable markets, the difference is recognised as a gain or loss
\u2022 in all other cases, the difference is deferred and the timing of recognition of deferred day one profit or loss is determined individually.
It is either amortised over the life of the instrument, deferred until the instrument\u2019s fair value can be determined using market observable
inputs or realised through settlement.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when the Group transfers
substantially all the risks and rewards of ownership to another entity. This is the case for cash collateral pledged, where the counterparty
has contractual rights to receive the cash flows generated and which is derecognised from the Consolidated Balance Sheet and a
corresponding receivable recognised for its return.
The Group enters into transactions whereby it transfers assets recognised in its Consolidated Balance Sheet, but retains either all or
substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognised. Examples
of such transactions are repurchase agreements and non-cash collateral pledged, unless the Group defaults on its obligations under the
relevant agreement.
In transactions in which the Group neither retains nor transfers substantially all of the risks and rewards of ownership of a financial asset
and it retains control over the asset, the Group continues to recognise the asset to the extent of its continuing involvement, determined
by the extent to\u00a0which it is exposed to changes in the value of the transferred asset.
The Group derecognises a financial liability when its contractual obligations expire or are discharged or cancelled. The Group also
derecognises a\u00a0financial liability when its terms are modified and the cash flows of the modified liability are substantially different,
in which case a new financial liability based on the modified terms is recognised at fair value.
On derecognition of a financial asset or financial liability, the difference between the carrying amount at the date of derecognition and the
consideration received (including any new asset obtained less any new liability assumed) is recognised in profit or loss.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerecognitionOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-598": { "value": "
Classification and measurement of financial assets
The Group classifies its financial assets on initial recognition as measured at amortised cost, fair value through other comprehensive income
(FVOCI) and fair value through profit or loss (FVTPL).
The classification and measurement of financial assets depends on their contractual cash flow characteristics and how they are managed
(the entity\u2019s business model). The contractual cash flow characteristics test aims to identify those assets with cash flows consistent with a
basic lending arrangement, i.e. which are \u2018solely payments of principal and interest\u2019 (SPPI). The business model test refers to how an entity
manages its financial assets with the objectives of generating cash flows. These factors determine whether the financial assets are measured
at amortised cost, FVOCI or FVTPL. Assets are therefore typically characterised as follows:
\u2022 amortised cost: financial assets with contractual terms that give rise solely to interest and principal cash flows and which are held in a
business model whose objective is to hold the assets to collect their cash flows. They are measured at amortised cost using the effective
interest method. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on
derecognition is also recognised in profit or loss
\u2022 FVOCI: financial assets with contractual terms that give rise solely to interest and principal cash flows and which are held in a business
model whose objective is achieved by holding the assets to collect their cash flows and selling them. Interest income calculated using the
effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses
are recognised in other comprehensive income. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss
\u2022 FVTPL: all other financial assets. Net gains and losses, including any interest or dividend income and foreign exchange gains and losses,
are\u00a0recognised in profit or loss, unless they arise from derivatives designated as hedging instruments in cash flow or net investment hedges.
Notwithstanding the above, on initial recognition the Group may irrevocably designate to FVTPL a financial asset that would otherwise be
measured at amortised cost or FVOCI if doing so eliminates or greatly reduces an accounting mismatch.
In making the SPPI assessment, the Group considers whether the contractual cash flows are consistent with a basic lending arrangement (that
is, interest includes only consideration for the time value of money, credit risk, other basic lending risks and a profit margin that is consistent with
a basic lending arrangement). This includes evaluating whether the financial asset contains a contractual term that could change the timing or
amount of contractual cash flows such that it would not meet this condition. Examples of such contractual terms to be considered are contingent
events that would change the amount or timing of cash flows, leverage features, prepayment and extension features, non-recourse asset
arrangements and features that modify consideration for the time value of money (e.g. periodic reset of interest rates).
The business model reflects how the Group manages assets in order to generate cash flows, i.e. it reflects whether the Group\u2019s objective
is solely to collect the contractual cash flows from assets or to collect both the contractual cash flows and cash flows arising from the sale
of assets. If neither of these is applicable (for example, financial assets are held for trading purposes), the business model is \u2018other\u2019 and the
financial asset is measured at FVTPL. Factors considered by the Group in determining the business model for a group of assets include past
experience on how the cash flows for these assets were collected, how the asset\u2019s performance is evaluated and reported to key
management personnel, how risks are assessed and managed and how managers are compensated.
The objective of the Group\u2019s business model for certain debt instruments, in particular those instruments backing annuity or investment
contract liabilities, including surplus assets, is to fund its liabilities. Consistent with the Group\u2019s investment strategy their performance is
evaluated on a total return basis, as significant buying and selling activity is undertaken on a regular basis to rebalance its portfolio and
to ensure that contractual cash flows from those assets are sufficient to settle the underlying liabilities. These investments do not follow a
\u2018held to collect\u2019 or \u2018held to collect and sell\u2019 business model and are therefore accounted for at FVTPL. This business model is also applicable
to reverse repurchase agreements and to derivatives. Equity instruments are accounted for at FVTPL.
Certain debt securities are held in separate portfolios for long-term yield. These include long-dated debt instruments backing annuities
liabilities, but in surplus to the IFRS 17 best estimate liability and risk adjustment, used to manage interest and inflation rate exposure, as
well as assets backing protection liabilities. These assets represent instruments consistent with the SPPI principles and are accounted for
at amortised cost or\u00a0FVOCI depending on the expected level of trading.
Receivables are accounted for at amortised cost.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-599": { "value": "
Classification and measurement of financial liabilities
The Group classifies and subsequently measures financial liabilities at amortised cost or FVTPL.
Investment contract liabilities
Investment contract liabilities are measured at FVTPL. This is because these liabilities, as well as the related assets, are managed and their
performance evaluated on a fair value basis. For unit linked liabilities, fair value is determined by reference to the value of the underlying net
asset values of the Group\u2019s unitised investment funds at the balance sheet date.
Core and operational borrowings
Borrowings are recognised initially at fair value, net of transaction costs. Borrowings are subsequently stated at amortised cost. The
difference between the net proceeds and the redemption value is recognised in the income statement over the borrowing period using
the effective interest rate method.
Other financial liabilities
Other financial liabilities include derivative liabilities, repurchase agreements and trail commission, which are measured at FVTPL, while
other payable balances are measured at amortised cost.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-601": { "value": "
Derivatives
Derivatives are initially recognised at fair value on the date on which the derivative contract is entered into. The Group\u2019s derivatives, other
than those designated as hedging instruments in cash flow or net investment hedges, are instruments held for trading and, are therefore
accounted for\u00a0at FVTPL.
Derivatives may be embedded in another contractual arrangement. If such a hybrid contract contains a host that is a financial asset, the
Group assesses the entire contract for classification and measurement purposes. Otherwise, the Group accounts for an embedded derivative
separately from the host contract when:
\u2022 its economic characteristics and risks are not closely related to those of the host contract
\u2022 the terms of the embedded derivative would have met the definition of a derivative if they were contained in a separate contract
\u2022 the hybrid contract is not measured at FVTPL.
These embedded derivatives are separately accounted for at FVTPL, unless the Group chooses to designate the entire hybrid contract at FVTPL.
A derivative embedded in a host insurance or reinsurance contract is not accounted for separately from the host contract if the embedded
derivative itself meets the definition of an insurance or reinsurance contract.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-600": { "value": "
Derivatives
Derivatives are initially recognised at fair value on the date on which the derivative contract is entered into. The Group\u2019s derivatives, other
than those designated as hedging instruments in cash flow or net investment hedges, are instruments held for trading and, are therefore
accounted for\u00a0at FVTPL.
Derivatives may be embedded in another contractual arrangement. If such a hybrid contract contains a host that is a financial asset, the
Group assesses the entire contract for classification and measurement purposes. Otherwise, the Group accounts for an embedded derivative
separately from the host contract when:
\u2022 its economic characteristics and risks are not closely related to those of the host contract
\u2022 the terms of the embedded derivative would have met the definition of a derivative if they were contained in a separate contract
\u2022 the hybrid contract is not measured at FVTPL.
These embedded derivatives are separately accounted for at FVTPL, unless the Group chooses to designate the entire hybrid contract at FVTPL.
A derivative embedded in a host insurance or reinsurance contract is not accounted for separately from the host contract if the embedded
derivative itself meets the definition of an insurance or reinsurance contract.
Hedge accounting
The Group uses hedge accounting, provided the prescribed criteria are met, to recognise the offsetting effects of changes in the fair value
or cash flow of the derivative instrument and the hedged item. Hedge accounting can be applied in order to:
\u2022 hedge the exposure to fair value movements of a recognised asset or liability or an unrecognised firm commitment, or a component
of any such item, that is attributable to a particular risk and could affect the Consolidated Income Statement
\u2022 hedge the exposure to variability in cash flows attributable to a particular risk associated with all, or a component of, a recognised asset
or liability, or a highly probable forecast transaction, that could affect the Consolidated Income Statement
\u2022 hedge the exposure to the currency risk associated with a net investment in a foreign operation.
The relationship between the hedging instrument and the hedged item, together with the risk management objective and strategy for
undertaking the hedge transaction, are documented formally at the inception of the transaction. The documentation includes identification of
the hedging instrument, the hedged item, the nature of the risk being hedged and how the Group will assess whether the hedging relationship
meets the hedge effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the hedge ratio is determined).
A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements:
\u2022 there is an economic relationship between the hedged item and the hedging instrument
\u2022 the effect of credit risk does not dominate the value changes that result from that economic relationship
\u2022 the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually
hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
The effective portion of the gain or loss on the hedging items is recognised in the Consolidated Statement of Comprehensive Income and
in a separate reserve within equity (cash flow hedge). The gain or loss relating to the ineffective portion is recognised immediately in the
Consolidated Income Statement. Amounts accumulated in equity are reclassified in the periods when the hedged item affects profit or loss.
The change in fair value of the hedging instrument related to the basis spread or forward points movements is recognised in a separate
component of equity (cost of hedging reserve) to the extent that it relates to the hedged item (cost of hedging reserve) and expensed on
a systematic and rational basis over the period of the hedge relationship.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-602": { "value": "
Collateral
Collateral received in the form of cash, which is not legally segregated from the Group, is recognised as an asset in the Consolidated Balance
Sheet with a corresponding liability for the repayment in Payables and other financial liabilities. However, where the Group has a currently
enforceable legal right of set-off and the ability and intent to net settle, the collateral liability and associated derivative balances are shown net.
Non-cash collateral received is not recognised in the Consolidated Balance Sheet unless the transfer of the collateral meets the derecognition
criteria from the perspective of the transferor. Such collateral is typically recognised when the Group either: (a) sells or repledges these assets
in the absence of default, at which point the obligation to return this collateral is recognised as a liability; or (b) the counterparty to the
arrangement defaults, at which point the collateral is seized and recognised as an asset.
Collateral pledged in the form of cash, which is legally segregated from the Group, is derecognised from the statement of financial position
with a\u00a0corresponding receivable recognised for its return. Non-cash collateral pledged is not derecognised from the statement of financial
position unless the Group defaults on its obligations under the relevant agreement and therefore continues to be recognised in the
Consolidated Balance Sheet within Financial investments.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForCollateralExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-604": { "value": "
Impairment of financial assets
The Group assesses on a forward-looking basis the expected credit loss (ECL) associated with its financial assets measured at amortised
cost and FVOCI and recognises a loss allowance for such losses at each reporting date. Expected credit losses are defined as the present
value of the difference between all contractual cash flows that are due and all cash flows that the entity expects to receive (i.e. the cash
shortfall), weighted based on their probability of occurrence. The loss allowance recognised under IFRS 9 can be equal to an amount
corresponding to a 12-month ECL or a lifetime ECL. A lifetime ECL is the ECL resulting from all possible default events over the expected
life of the financial asset; a 12-month ECL is the portion of lifetime ECL resulting from default events on a financial asset that are possible
within the 12 months after the reporting date. For a financial asset that is credit-impaired at the reporting date, but that is not a purchased or
originated credit-impaired financial asset, expected credit losses are measured as the difference between the asset\u2019s gross carrying amount
and the present value of estimated future cash flows, discounted at the financial asset\u2019s original effective interest rate. Any adjustment is
recognised in profit or loss as an impairment gain or loss.
The Group defines default on a financial asset as the inability to meet in full and on time an original promise of expected cash flows,
the amount and timing of which are defined with certainty. Any breach of this promise, by any amount or time (in excess of any potential
planned grace period), constitutes a default. This is consistent with the definition of default used for internal credit risk management
purposes. An asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of
that financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable data:
\u2022 significant financial difficulty of the borrower
\u2022 a breach of contract, such as a default or past due event
\u2022 the restructure of a loan by the Group on terms which it would not otherwise consider
\u2022 it becomes probable that the borrower will enter bankruptcy or other financial reorganisation.
A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.
The ECL model is run from the date of initial recognition of a financial asset and its output updated at every reporting period, even if no actual
loss events have taken place. The impact of updating the inputs of the ECL model in the reporting period is recognised in profit or loss directly
where it affects the carrying value of financial assets at amortised cost, while for assets at FVOCI an equal and opposite movement is
recorded in other comprehensive income.
In order to determine whether the Group measures ECLs at an amount equal to 12-month ECL or lifetime ECL, at each reporting period
the Group is required to assess which \u2018stage\u2019 a financial asset falls into. Stages reflect the general pattern of deterioration in credit risk
of a financial instrument that ultimately defaults, as follows:
\u2022 Stage 1 includes financially healthy financial assets that are expected to perform in line with their contractual terms and which have
no signs of\u00a0increased credit risk
\u2022 Stage 2 includes financial assets for which a significant increase in credit risk has occurred since initial recognition, but which are not
credit-impaired
\u2022 Stage 3 applies to credit-impaired financial instruments.
When financial assets are under Stage 1, 12-month ECLs are recognised. When financial assets are under Stage 2 or 3, lifetime ECLs are
recognised. An instrument moves down (or up) the stages when a significant increase in credit risk (SICR) has happened (or has reversed).
When determining whether the credit risk of a financial instrument has increased significantly since initial recognition, the Group considers
reasonable and supportable information, both qualitative and quantitative, that is relevant and is available without undue cost or effort,
including forward-looking information at its disposal. Key indicators used in order to determine whether a SICR has occurred (either in
isolation or in combination) are:
\u2022 deterioration in rating grade between origination date and reporting date. The level of deterioration required by an individual asset is
determined using a relative rating matrix
\u2022 exposure is identified on the investment managers\u2019 \u2018watchlist\u2019
\u2022 exposure is identified on internal \u2018credit watchlists\u2019
\u2022 a manual shift of an exposure to Stage 2 on an exceptional basis (where required, using management judgement).
The provisions of IFRS 9 include a rebuttable presumption that the credit risk on a financial asset has increased significantly since initial
recognition when contractual payments are more than 30 days past due, which is taken into account for this assessment.
The Group makes use of a practical expedient available in IFRS 9 whereby it can be assumed that the credit risk on a financial instrument
has\u00a0not\u00a0increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date
(e.g.\u00a0investment grade as determined by the Group\u2019s asset managers). This allows recognition of 12-month ECLs as opposed to, potentially,
lifetime ECLs. This is deemed to be the case where assets that have been downgraded remain of good credit quality (i.e. investment grade
as\u00a0determined by the Group\u2019s asset managers) as at the reporting date, to the extent that, where relevant, the Group\u2019s internal credit risk
ratings are considered to be consistent with a globally understood definition of \u2018low credit risk\u2019.
The Group estimates ECLs on its financial investments at amortised cost and debt instruments at FVOCI which are not credit-impaired
by using the probability of default approach. Based on this method, the ECLs are a probability-weighted estimate of the present value of
estimated cash shortfalls, i.e. the weighted average of credit losses, with the respective risks of a default occurring used as the weightings.
For this purpose, the key elements to be calculated are the Probability of Default (PD), i.e. the estimate of the likelihood of default over a
given time horizon (either 12 months or lifetime); the respective Loss Given Default (LGD); and the Exposure at Default (EAD).
Exposures that move into Stage 3 are able to transition back to Stage 2 if the asset no longer meets the definition of default. Similarly,
exposures will re-transition from Stage 2 to Stage 1 where the SICR indicators no longer apply. No separate cure or probation periods are
applied on the basis that assets will not be re-rated or moved out of default until there is evidence of stable and improved performance.
In order to determine 12-month or lifetime PDs the Group\u2019s models utilise historical data obtained from S&P and Moody\u2019s in order to
evaluate transitions (i.e. the probability that a security changes rating in a given year) and defaults, plus scenario-specific annual scaling
factors which adjust the PDs for forward-looking information. The final PDs produced by the model are unconditional, i.e. they incorporate
both the probability of not defaulting until the start of the period and the subsequent probability of default in that period, conditional on the
position not having defaulted to that point. This allows them to be summed over 12 months to provide 12-month PD estimates, or over all
remaining months to produce lifetime PD estimates.
LGD is the magnitude of the likely loss if there is a default, based on the history of recovery rates of claims against defaulted counterparties
and taking into account collateral values where applicable.
EAD represents the expected exposure in the event of a default. The Group estimates LGD based on the history of recovery rates of claims
against defaulted counterparties. Appropriate haircuts are applied to baseline unsecured LGDs and used in conjunction with forecast
collateral values to estimate LGD for assets secured by collateral.
The Group has adopted a simplified approach for trade receivables, contract assets and finance and operating lease receivables. This allows
measurement of lifetime ECLs only, thereby removing the need to identify SICRs. For these balances, the Group makes use of provision
matrices in order to calculate such lifetime ECLs. This is a practical expedient allowed by IFRS 9 whereby historical credit loss experience
and fixed loss rates are applied to the balances outstanding. Historical loss rates are adjusted to allow for forward-looking information", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-603": { "value": "
Impairment of financial assets
The Group assesses on a forward-looking basis the expected credit loss (ECL) associated with its financial assets measured at amortised
cost and FVOCI and recognises a loss allowance for such losses at each reporting date. Expected credit losses are defined as the present
value of the difference between all contractual cash flows that are due and all cash flows that the entity expects to receive (i.e. the cash
shortfall), weighted based on their probability of occurrence. The loss allowance recognised under IFRS 9 can be equal to an amount
corresponding to a 12-month ECL or a lifetime ECL. A lifetime ECL is the ECL resulting from all possible default events over the expected
life of the financial asset; a 12-month ECL is the portion of lifetime ECL resulting from default events on a financial asset that are possible
within the 12 months after the reporting date. For a financial asset that is credit-impaired at the reporting date, but that is not a purchased or
originated credit-impaired financial asset, expected credit losses are measured as the difference between the asset\u2019s gross carrying amount
and the present value of estimated future cash flows, discounted at the financial asset\u2019s original effective interest rate. Any adjustment is
recognised in profit or loss as an impairment gain or loss.
The Group defines default on a financial asset as the inability to meet in full and on time an original promise of expected cash flows,
the amount and timing of which are defined with certainty. Any breach of this promise, by any amount or time (in excess of any potential
planned grace period), constitutes a default. This is consistent with the definition of default used for internal credit risk management
purposes. An asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of
that financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable data:
\u2022 significant financial difficulty of the borrower
\u2022 a breach of contract, such as a default or past due event
\u2022 the restructure of a loan by the Group on terms which it would not otherwise consider
\u2022 it becomes probable that the borrower will enter bankruptcy or other financial reorganisation.
A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.
The ECL model is run from the date of initial recognition of a financial asset and its output updated at every reporting period, even if no actual
loss events have taken place. The impact of updating the inputs of the ECL model in the reporting period is recognised in profit or loss directly
where it affects the carrying value of financial assets at amortised cost, while for assets at FVOCI an equal and opposite movement is
recorded in other comprehensive income.
In order to determine whether the Group measures ECLs at an amount equal to 12-month ECL or lifetime ECL, at each reporting period
the Group is required to assess which \u2018stage\u2019 a financial asset falls into. Stages reflect the general pattern of deterioration in credit risk
of a financial instrument that ultimately defaults, as follows:
\u2022 Stage 1 includes financially healthy financial assets that are expected to perform in line with their contractual terms and which have
no signs of\u00a0increased credit risk
\u2022 Stage 2 includes financial assets for which a significant increase in credit risk has occurred since initial recognition, but which are not
credit-impaired
\u2022 Stage 3 applies to credit-impaired financial instruments.
When financial assets are under Stage 1, 12-month ECLs are recognised. When financial assets are under Stage 2 or 3, lifetime ECLs are
recognised. An instrument moves down (or up) the stages when a significant increase in credit risk (SICR) has happened (or has reversed).
When determining whether the credit risk of a financial instrument has increased significantly since initial recognition, the Group considers
reasonable and supportable information, both qualitative and quantitative, that is relevant and is available without undue cost or effort,
including forward-looking information at its disposal. Key indicators used in order to determine whether a SICR has occurred (either in
isolation or in combination) are:
\u2022 deterioration in rating grade between origination date and reporting date. The level of deterioration required by an individual asset is
determined using a relative rating matrix
\u2022 exposure is identified on the investment managers\u2019 \u2018watchlist\u2019
\u2022 exposure is identified on internal \u2018credit watchlists\u2019
\u2022 a manual shift of an exposure to Stage 2 on an exceptional basis (where required, using management judgement).
The provisions of IFRS 9 include a rebuttable presumption that the credit risk on a financial asset has increased significantly since initial
recognition when contractual payments are more than 30 days past due, which is taken into account for this assessment.
The Group makes use of a practical expedient available in IFRS 9 whereby it can be assumed that the credit risk on a financial instrument
has\u00a0not\u00a0increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date
(e.g.\u00a0investment grade as determined by the Group\u2019s asset managers). This allows recognition of 12-month ECLs as opposed to, potentially,
lifetime ECLs. This is deemed to be the case where assets that have been downgraded remain of good credit quality (i.e. investment grade
as\u00a0determined by the Group\u2019s asset managers) as at the reporting date, to the extent that, where relevant, the Group\u2019s internal credit risk
ratings are considered to be consistent with a globally understood definition of \u2018low credit risk\u2019.
The Group estimates ECLs on its financial investments at amortised cost and debt instruments at FVOCI which are not credit-impaired
by using the probability of default approach. Based on this method, the ECLs are a probability-weighted estimate of the present value of
estimated cash shortfalls, i.e. the weighted average of credit losses, with the respective risks of a default occurring used as the weightings.
For this purpose, the key elements to be calculated are the Probability of Default (PD), i.e. the estimate of the likelihood of default over a
given time horizon (either 12 months or lifetime); the respective Loss Given Default (LGD); and the Exposure at Default (EAD).
Exposures that move into Stage 3 are able to transition back to Stage 2 if the asset no longer meets the definition of default. Similarly,
exposures will re-transition from Stage 2 to Stage 1 where the SICR indicators no longer apply. No separate cure or probation periods are
applied on the basis that assets will not be re-rated or moved out of default until there is evidence of stable and improved performance.
In order to determine 12-month or lifetime PDs the Group\u2019s models utilise historical data obtained from S&P and Moody\u2019s in order to
evaluate transitions (i.e. the probability that a security changes rating in a given year) and defaults, plus scenario-specific annual scaling
factors which adjust the PDs for forward-looking information. The final PDs produced by the model are unconditional, i.e. they incorporate
both the probability of not defaulting until the start of the period and the subsequent probability of default in that period, conditional on the
position not having defaulted to that point. This allows them to be summed over 12 months to provide 12-month PD estimates, or over all
remaining months to produce lifetime PD estimates.
LGD is the magnitude of the likely loss if there is a default, based on the history of recovery rates of claims against defaulted counterparties
and taking into account collateral values where applicable.
EAD represents the expected exposure in the event of a default. The Group estimates LGD based on the history of recovery rates of claims
against defaulted counterparties. Appropriate haircuts are applied to baseline unsecured LGDs and used in conjunction with forecast
collateral values to estimate LGD for assets secured by collateral.
The Group has adopted a simplified approach for trade receivables, contract assets and finance and operating lease receivables. This allows
measurement of lifetime ECLs only, thereby removing the need to identify SICRs. For these balances, the Group makes use of provision
matrices in order to calculate such lifetime ECLs. This is a practical expedient allowed by IFRS 9 whereby historical credit loss experience
and fixed loss rates are applied to the balances outstanding. Historical loss rates are adjusted to allow for forward-looking information.
Intangible assets are tested for impairment either individually or at the cash-generating unit level. Intangible assets with indefinite useful
lives and intangible assets not yet available for use are tested for impairment at least annually, or whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. Intangible assets with finite useful lives are tested when there are indications
of impairment. The recoverable amount is the higher of an asset\u2019s fair value less costs to sell and its value in use.
An impairment review of Property, plant and equipment not carried at fair value is performed whenever events or changes in circumstances
indicate that their carrying amount may not be recoverable. Where the carrying amount of an asset is greater than its estimated recoverable
amount, which is the higher of the assets fair value less costs of disposal and value in use, it is written down immediately to its recoverable
amount, with an impairment loss recognised in the Consolidated Income Statement.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-605": { "value": "
Hedge accounting
The Group uses hedge accounting, provided the prescribed criteria are met, to recognise the offsetting effects of changes in the fair value
or cash flow of the derivative instrument and the hedged item. Hedge accounting can be applied in order to:
\u2022 hedge the exposure to fair value movements of a recognised asset or liability or an unrecognised firm commitment, or a component
of any such item, that is attributable to a particular risk and could affect the Consolidated Income Statement
\u2022 hedge the exposure to variability in cash flows attributable to a particular risk associated with all, or a component of, a recognised asset
or liability, or a highly probable forecast transaction, that could affect the Consolidated Income Statement
\u2022 hedge the exposure to the currency risk associated with a net investment in a foreign operation.
The relationship between the hedging instrument and the hedged item, together with the risk management objective and strategy for
undertaking the hedge transaction, are documented formally at the inception of the transaction. The documentation includes identification of
the hedging instrument, the hedged item, the nature of the risk being hedged and how the Group will assess whether the hedging relationship
meets the hedge effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the hedge ratio is determined).
A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements:
\u2022 there is an economic relationship between the hedged item and the hedging instrument
\u2022 the effect of credit risk does not dominate the value changes that result from that economic relationship
\u2022 the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually
hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
The effective portion of the gain or loss on the hedging items is recognised in the Consolidated Statement of Comprehensive Income and
in a separate reserve within equity (cash flow hedge). The gain or loss relating to the ineffective portion is recognised immediately in the
Consolidated Income Statement. Amounts accumulated in equity are reclassified in the periods when the hedged item affects profit or loss.
The change in fair value of the hedging instrument related to the basis spread or forward points movements is recognised in a separate
component of equity (cost of hedging reserve) to the extent that it relates to the hedged item (cost of hedging reserve) and expensed on
a systematic and rational basis over the period of the hedge relationship.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-607": { "value": "
Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date.
Fair value measurements are based on observable and unobservable inputs. Observable inputs reflect market data obtained from
independent sources, while unobservable inputs reflect the Group\u2019s view of market assumptions in the absence of observable market
information. The Group utilises techniques that maximise the use of observable inputs and minimise the use of unobservable inputs.
The best evidence of the fair value of a financial instrument at initial recognition is normally the transaction price. In certain circumstances,
the fair value at initial recognition differs from the transaction price. If the fair value is evidenced by comparison by a quoted price in an active
market for an identical instrument, or is based on a valuation technique that uses only data from observable markets, the difference between
the fair value at initial recognition and the transaction price is recognised as a gain or loss in the Consolidated Income Statement. In all other
cases, the difference between the fair value at initial recognition and the transaction price is deferred and recognised in the Consolidated
Income Statement over the life of the instrument to the extent that it arises from a change in a factor (including time) that market participants
would take into account when pricing the instrument.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-606": { "value": "
Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date.
Fair value measurements are based on observable and unobservable inputs. Observable inputs reflect market data obtained from
independent sources, while unobservable inputs reflect the Group\u2019s view of market assumptions in the absence of observable market
information. The Group utilises techniques that maximise the use of observable inputs and minimise the use of unobservable inputs.
The best evidence of the fair value of a financial instrument at initial recognition is normally the transaction price. In certain circumstances,
the fair value at initial recognition differs from the transaction price. If the fair value is evidenced by comparison by a quoted price in an active
market for an identical instrument, or is based on a valuation technique that uses only data from observable markets, the difference between
the fair value at initial recognition and the transaction price is recognised as a gain or loss in the Consolidated Income Statement. In all other
cases, the difference between the fair value at initial recognition and the transaction price is deferred and recognised in the Consolidated
Income Statement over the life of the instrument to the extent that it arises from a change in a factor (including time) that market participants
would take into account when pricing the instrument.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-608": { "value": "
Revenue
Insurance revenue
The Group\u2019s insurance revenue depicts the provision of services arising from a group of insurance contracts, reflecting the consideration
the Group expects to be entitled to in exchange for those services. Insurance revenue from a group of insurance contracts is therefore the
relevant portion for the period of the total consideration for the contracts, (i.e. the amount of premiums paid to the Group adjusted for
financing effect (the\u00a0time value of money) and excluding any investment components).
The total consideration for a group of contracts covers amounts related to the provision of services and comprises:
\u2022 the release of the CSM
\u2022 changes in the risk adjustment for non-financial risk relating to current service
\u2022 claims and other insurance service expenses expected at the beginning of the period
\u2022 experience adjustments arising from premiums received in the period other than those that relate to future service
\u2022 insurance acquisition cost recovery determined by allocating the portion of premiums related to the recovery of those costs on the basis
of\u00a0insurance coverage provided
\u2022 other amounts, including any other pre-recognition cash flow assets derecognised at the date of initial recognition.
Fees from fund management and investment contracts
The Group generates revenue from acting as the investment manager for clients. Fees charged on investment management services are
based on the contractual fee arrangements applied to assets under management and recognised as revenue as the services are provided.
The Group\u2019s income from investment contracts is primarily derived from fees for administration and managing of funds in pension plans.
Revenue generated on investment contracts is recognised as services are provided. No significant judgements are applied on the timing or
transaction price. In the instances of performance fees where revenue is subject to meeting a certain performance threshold, such revenue is
not recognised until the condition has been met and it is highly probable that no significant reversal of amounts would occur. Variable costs
directly related to\u00a0securing new contracts are capitalised and amortised over the estimated period over which the revenue is earned.
Transaction fees are charged to implement trades for clients. Such fees are charged at the time the transaction takes place and are based
on\u00a0the\u00a0size of the underlying contract.
Other operational income from contracts with customers
House building
House building revenue arises from the sale of residential properties and land and is recognised net of discounts and sales incentives.
It also includes sale proceeds of part exchange properties. Sales of private houses are recognised on legal completion. Sales of social
housing, where multiple units are developed and sold under a contractual agreement with a single customer, typically a housing association,
are recognised over time in accordance with construction progress. Sales of land and commercial property are recognised on unconditional
exchange, namely when contracts are exchanged or missives concluded and, where appropriate, construction is complete. The transaction
price is determined using extensive research and expert judgement, current market values and regional variations.
Warranties are provided on all properties and range from 2-10 years. Due to their features, these do not represent separate performance obligations.
Professional services fees
The Group\u2019s professional services fees revenue arises from professional services provided by employed surveyors and third-party providers,
panel\u00a0management fees and administration fees. These fees are based on fee scales or contracts. Revenue is recognised when the service
has\u00a0been rendered.
In addition, the Group derives professional fees from facilitation of mortgage arrangements and related products such as conveyancing. These are
based on an agreement/contract and could be tiered based on volume. The obligation in such instances is satisfied on completion of the mortgage/
service, at which point the revenue is recognised. There is no significant judgement applied on the timing or amount of fee recognised.
Insurance broker fees
Fees are charged on each performance obligation offered to the customer as per agreed structure. Revenue for placement services is
recognised at the point in time when the intermediary has satisfied its performance obligation, that is when the terms of the insurance
policy have been agreed contractually by the insurer and policyholder and the insurer has a present right to payment from the policyholder.
No significant judgements are applied on the timing or transaction price.
Investment return
Investment return includes unrealised fair value gains and losses on financial investments at fair value through profit or loss, realised gains
and\u00a0losses, dividends, rent and interest. Dividends are accrued on an ex-dividend basis. Interest income is recognised as it accrues, taking into
account the effective yield on the investment. Rental income is recognised on an accruals basis and is generally recognised on a straight line
basis unless there is compelling evidence that benefits do not accrue evenly over the period of the lease. Interest income for financial assets
which are not classified as fair value through profit or loss (FVTPL) is recognised using the effective interest method.
A gain or loss on a financial investment is only realised on disposal or transfer and is the difference between the proceeds received, net
of transactions cost and its original cost or amortised cost, as appropriate. Realised gains or losses on investment property represent the
difference between the net disposal proceeds and the carrying value of the property.
Unrealised gains and losses represent the difference between the carrying value at the end of the year and the carrying value at the previous
year end or purchase value during the year, less the reversal of previously unrealised gains and losses in respect of disposals made during
the year.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-612": { "value": "
Insurance service expenses
Insurance service expenses arising from insurance contracts are recognised in profit or loss as they are incurred. They exclude repayments
of investment components and comprise the following items:
\u2022 incurred claims and benefits, excluding investment components reduced by loss component allocations
\u2022 incurred directly attributable expenses
\u2022 insurance acquisition cost amortisation
\u2022 insurance acquisition cost asset impairment.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinanceCostsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-611": { "value": "
Insurance service expenses
Insurance service expenses arising from insurance contracts are recognised in profit or loss as they are incurred. They exclude repayments
of investment components and comprise the following items:
\u2022 incurred claims and benefits, excluding investment components reduced by loss component allocations
\u2022 incurred directly attributable expenses
\u2022 insurance acquisition cost amortisation
\u2022 insurance acquisition cost asset impairment.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInterestIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-610": { "value": "
Insurance service expenses
Insurance service expenses arising from insurance contracts are recognised in profit or loss as they are incurred. They exclude repayments
of investment components and comprise the following items:
\u2022 incurred claims and benefits, excluding investment components reduced by loss component allocations
\u2022 incurred directly attributable expenses
\u2022 insurance acquisition cost amortisation
\u2022 insurance acquisition cost asset impairment.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredAcquisitionCostsArisingFromInsuranceContractsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-609": { "value": "
Insurance service expenses
Insurance service expenses arising from insurance contracts are recognised in profit or loss as they are incurred. They exclude repayments
of investment components and comprise the following items:
\u2022 incurred claims and benefits, excluding investment components reduced by loss component allocations
\u2022 incurred directly attributable expenses
\u2022 insurance acquisition cost amortisation
\u2022 insurance acquisition cost asset impairment.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinanceIncomeAndCostsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-613": { "value": "
Dividends
Interim dividends on ordinary shares are deducted from retained earnings in the period in which they are paid. Final dividends on ordinary
shares are recognised as a liability in the period in which they have been approved by shareholders of the Company.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDividendsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-614": { "value": "
Earnings per share
Earnings per share is a measure of the portion of the Group\u2019s profit allocated to each outstanding share. It is calculated by dividing net
income attributable to ordinary equity holders by the weighted average number of ordinary shares in issue during the year, excluding
employee scheme treasury shares. For this purpose, net income is defined as the profit after tax, attributable to equity holders of the
Company, derived from continuing operations.
For diluted earnings per share, the weighted average number of ordinary shares in issue, excluding employee scheme treasury shares, is
adjusted to assume conversion of all dilutive potential ordinary shares, such as share options granted to employees. Potential or contingent
share issuances are treated as dilutive when their conversion to shares would decrease net earnings per share.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEarningsPerShareExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-617": { "value": "
Intangible assets
Intangible assets mainly consist of capitalised software costs.
Where software costs are separately identifiable and measurable, they are capitalised at cost and amortised over their expected useful life
on a straight-line basis. Costs incurred to internally develop software are only capitalised if the expenditure can be measured reliably, the
product or process is technically and commercially feasible, future economic benefits are probable and the Group intends to and has
sufficient resources to\u00a0complete such development and to use or sell the asset. Otherwise, such costs are recognised in profit or loss as
incurred. The estimated amortisation period for IT development costs and software is between 3 and 10 years.
Intangible assets acquired via business combinations are recognised at fair value and are subsequently amortised on a straight-line basis
over their estimated useful life.
Amortisation methods, useful lives and any expected residual values are reviewed at each reporting date and adjusted if appropriate.
Intangible assets are tested for impairment either individually or at the cash-generating unit level. Intangible assets with indefinite useful
lives and intangible assets not yet available for use are tested for impairment at least annually, or whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. Intangible assets with finite useful lives are tested when there are indications
of impairment. The recoverable amount is the higher of an asset\u2019s fair value less costs to sell and its value in use.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsOtherThanGoodwillExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-616": { "value": "
Intangible assets
Intangible assets mainly consist of capitalised software costs.
Where software costs are separately identifiable and measurable, they are capitalised at cost and amortised over their expected useful life
on a straight-line basis. Costs incurred to internally develop software are only capitalised if the expenditure can be measured reliably, the
product or process is technically and commercially feasible, future economic benefits are probable and the Group intends to and has
sufficient resources to\u00a0complete such development and to use or sell the asset. Otherwise, such costs are recognised in profit or loss as
incurred. The estimated amortisation period for IT development costs and software is between 3 and 10 years.
Intangible assets acquired via business combinations are recognised at fair value and are subsequently amortised on a straight-line basis
over their estimated useful life.
Amortisation methods, useful lives and any expected residual values are reviewed at each reporting date and adjusted if appropriate.
Intangible assets are tested for impairment either individually or at the cash-generating unit level. Intangible assets with indefinite useful
lives and intangible assets not yet available for use are tested for impairment at least annually, or whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. Intangible assets with finite useful lives are tested when there are indications
of impairment. The recoverable amount is the higher of an asset\u2019s fair value less costs to sell and its value in use.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-615": { "value": "
Intangible assets
Intangible assets mainly consist of capitalised software costs.
Where software costs are separately identifiable and measurable, they are capitalised at cost and amortised over their expected useful life
on a straight-line basis. Costs incurred to internally develop software are only capitalised if the expenditure can be measured reliably, the
product or process is technically and commercially feasible, future economic benefits are probable and the Group intends to and has
sufficient resources to\u00a0complete such development and to use or sell the asset. Otherwise, such costs are recognised in profit or loss as
incurred. The estimated amortisation period for IT development costs and software is between 3 and 10 years.
Intangible assets acquired via business combinations are recognised at fair value and are subsequently amortised on a straight-line basis
over their estimated useful life.
Amortisation methods, useful lives and any expected residual values are reviewed at each reporting date and adjusted if appropriate.
Intangible assets are tested for impairment either individually or at the cash-generating unit level. Intangible assets with indefinite useful
lives and intangible assets not yet available for use are tested for impairment at least annually, or whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. Intangible assets with finite useful lives are tested when there are indications
of impairment. The recoverable amount is the higher of an asset\u2019s fair value less costs to sell and its value in use.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForResearchAndDevelopmentExpenseExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-618": { "value": "
Intangible assets are tested for impairment either individually or at the cash-generating unit level. Intangible assets with indefinite useful
lives and intangible assets not yet available for use are tested for impairment at least annually, or whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. Intangible assets with finite useful lives are tested when there are indications
of impairment. The recoverable amount is the higher of an asset\u2019s fair value less costs to sell and its value in use.
An impairment review of Property, plant and equipment not carried at fair value is performed whenever events or changes in circumstances
indicate that their carrying amount may not be recoverable. Where the carrying amount of an asset is greater than its estimated recoverable
amount, which is the higher of the assets fair value less costs of disposal and value in use, it is written down immediately to its recoverable
amount, with an impairment loss recognised in the Consolidated Income Statement.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfNonfinancialAssetsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-619": { "value": "
Investment property
Investment property comprises land and buildings which are held for long-term rental yields and capital growth, as well as right-of-use
assets of the same nature and are not occupied by the Group. Completed investment property is carried at fair value with changes in fair
value recognised in the Consolidated Income Statement within Investment return. Investment properties under construction are included
within Property, plant and equipment and are stated at cost less any impairment until construction is completed or fair value becomes
reliably measurable.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentPropertyExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-620": { "value": "
Non-current assets held for sale
Assets and liabilities part of a disposal group classified as held for sale are shown separately in the Consolidated Balance Sheet. They are
recorded at the lower of their carrying amount and their fair value less costs to sell.
Discontinued operations
Discontinued operations comprise those activities that were disposed of or classified as held for sale at the end of the period and represent
a separate major line of business or geographical area that can clearly be distinguished for operational and financial reporting purposes.
The results of discontinued operations are presented separately in the Consolidated Income Statement and Consolidated Statement of
Comprehensive Income. Comparatives are re-presented where applicable.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleAndDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-621": { "value": "
Discontinued operations
Discontinued operations comprise those activities that were disposed of or classified as held for sale at the end of the period and represent
a separate major line of business or geographical area that can clearly be distinguished for operational and financial reporting purposes.
The results of discontinued operations are presented separately in the Consolidated Income Statement and Consolidated Statement of
Comprehensive Income. Comparatives are re-presented where applicable.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-622": { "value": "
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, treasury bills and other short-term highly liquid
investments with maturities of three months or less from the date of acquisition.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyToDetermineComponentsOfCashAndCashEquivalents", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-624": { "value": "
Property, plant and equipment
Property, plant and equipment includes tangible assets owned by the Group (such as land and office and other buildings) or held under lease
arrangements (such as office buildings, IT equipment and vehicles). Property, plant and equipment includes owner occupied property held by a
fund, the units of which determine benefits for its investors. In accordance with IAS 16, \u2018Property, Plant and Equipment\u2019, the Group has elected
to measure this asset at fair value, with changes in fair value recognised in the Consolidated Income Statement within Investment return.
All other assets within Property, plant and equipment are carried at historical cost less accumulated depreciation, calculated on a straight-
line basis over their estimated useful life. Amortisation methods, useful lives and any expected residual values are reviewed at each
reporting date and\u00a0adjusted if appropriate.
An impairment review of Property, plant and equipment not carried at fair value is performed whenever events or changes in circumstances
indicate that their carrying amount may not be recoverable. Where the carrying amount of an asset is greater than its estimated recoverable
amount, which is the higher of the assets fair value less costs of disposal and value in use, it is written down immediately to its recoverable
amount, with an impairment loss recognised in the Consolidated Income Statement.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDepreciationExpenseExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-623": { "value": "
Property, plant and equipment
Property, plant and equipment includes tangible assets owned by the Group (such as land and office and other buildings) or held under lease
arrangements (such as office buildings, IT equipment and vehicles). Property, plant and equipment includes owner occupied property held by a
fund, the units of which determine benefits for its investors. In accordance with IAS 16, \u2018Property, Plant and Equipment\u2019, the Group has elected
to measure this asset at fair value, with changes in fair value recognised in the Consolidated Income Statement within Investment return.
All other assets within Property, plant and equipment are carried at historical cost less accumulated depreciation, calculated on a straight-
line basis over their estimated useful life. Amortisation methods, useful lives and any expected residual values are reviewed at each
reporting date and\u00a0adjusted if appropriate.
An impairment review of Property, plant and equipment not carried at fair value is performed whenever events or changes in circumstances
indicate that their carrying amount may not be recoverable. Where the carrying amount of an asset is greater than its estimated recoverable
amount, which is the higher of the assets fair value less costs of disposal and value in use, it is written down immediately to its recoverable
amount, with an impairment loss recognised in the Consolidated Income Statement.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-625": { "value": "
Leases
Lessee
Where the Group is a lessee, it recognises leases on the Consolidated Balance Sheet as \u2018right-of-use\u2019 assets and lease liabilities.
The right-of-use assets\u2019 value is initially recognised as the calculated value of the lease liabilities, initial direct costs and incentives received.
The right-of-use assets are subsequently accounted for in accordance with the cost model in IAS 16, \u2018Property, Plant and Equipment\u2019 or as
investment property under IAS 40, \u2018Investment Property\u2019. The Group also assesses right-of-use assets classified as Property, plant and
equipment for impairment when such indicators exist.
The initial measurement of the lease liabilities is made up of the present value of lease payments to be made over the lease term, including
fixed lease payments and excluding lease incentive receivables. The Group uses the incremental borrowing rate as a discount rate for
calculating the lease liabilities. The lease liabilities are unwound over the term of the lease giving rise to an interest expense. Additionally,
the liabilities are reduced when lease payments are made. The Group reassesses the carrying amount of lease liabilities and right-of-use
assets if certain events occur that modify the original assumptions used to calculate the lease balances upon initial recognition.
The Group leases offices, vehicles, IT equipment and investment properties under non-cancellable operating lease agreements. The
Group has elected to make use of the recognition exemptions as permitted in respect of short-term leases (lease contracts with a term
of 12 months or less) and lease contracts for which the underlying asset is of low value. Such leases are not recognised on the Consolidated
Balance Sheet but the Group recognises the associated lease payments as an expense over the lease term.
Lessor
Where the Group is the lessor, leases are classified as finance leases if the risks and rewards of ownership are substantially transferred to
the lessee and operating leases if they are not substantially transferred.
The Group leases certain investment properties to third parties. Under these agreements, substantially all the risks and rewards incidental to
ownership are transferred to the lessee and therefore the contracts have been classified as finance leases. At the lease commencement date,
the\u00a0Group derecognises the investment property asset and recognises a receivable asset on its Consolidated Balance Sheet to reflect the net
investment in the\u00a0lease, equal to the present value of the lease payments. The Group recognises finance income over the lease term to reflect
the rate of return on\u00a0the net investment in the lease.
Under other lease agreements the Group is considered to substantially retain all the risks and rewards of ownership of the underlying asset,
therefore these contracts have been classified as operating leases. Lease income from operating leases is recognised in the Consolidated
Income Statement on\u00a0a straight-line basis over the lease term.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-626": { "value": "
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow
of\u00a0resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can
be\u00a0made. Where the Group expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised
as\u00a0a\u00a0separate asset but only when the reimbursement is virtually certain. The Group recognises a provision for onerous contracts when the
expected benefits to be derived from a contract are less than the unavoidable costs of meeting the obligations under the contract.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-627": { "value": "
Tax
Current tax
Current tax comprises tax payable on current year profits, adjusted for non-tax deductible or non-taxable items and any adjustments to tax
payable in respect of previous periods. Current tax is recognised in the Consolidated Income Statement unless it relates to items which are
recognised in the Consolidated Statement of Comprehensive Income or directly in equity.
Deferred tax
Deferred tax is calculated on differences between the accounting value of assets and liabilities and their respective tax values. Deferred tax
is also recognised in respect of unused tax losses to the extent it is probable that future taxable profits will arise against which the losses
can be utilised. Deferred tax is charged or credited to the Consolidated Income Statement, except when it relates to items charged or
credited to the Consolidated Statement of Comprehensive Income or charged or credited directly in equity.
Tax attributable to policyholders and equity holders
The total tax expense shown in the Group\u2019s Consolidated Income Statement includes income tax borne by both policyholders and equity
holders. This has been split between tax attributable to policyholders\u2019 returns and equity holders\u2019 profits. Policyholder tax comprises the
tax suffered on policyholder investment returns, while equity holder tax is corporation tax charged on equity holder profit. The separate
presentation is intended to provide more relevant information about the tax that the Group pays on the profits that it makes.
Use of estimates
Tax balances include the use of estimates and assumptions which affect items reported in the Consolidated Balance Sheet, Consolidated
Income Statement and Consolidated Statement of Comprehensive Income. Although these estimates are based on management\u2019s best
knowledge of current circumstances and future events and actions, actual results may differ from those estimates.
For tax this includes the determination of assets and liabilities recognised in respect of uncertain tax positions and the estimation of future
taxable income supporting deferred tax asset recognition.
As the Group operates internationally, it is exposed to uncertain tax positions and changes in legislation in the jurisdictions in which it
operates. The assessment of uncertain tax positions is subjective and significant management judgement is required. This judgement is
based on interpretation of legislation, management experience and professional advice. The directors have assessed the Group\u2019s uncertain
tax positions and are comfortable that the provisions in place are not material individually or in aggregate and that a reasonable possible
alternative outcome in the\u00a0next financial year would not have a material impact to the results of the Group.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-628": { "value": "
Deferred tax
Deferred tax is calculated on differences between the accounting value of assets and liabilities and their respective tax values. Deferred tax
is also recognised in respect of unused tax losses to the extent it is probable that future taxable profits will arise against which the losses
can be utilised. Deferred tax is charged or credited to the Consolidated Income Statement, except when it relates to items charged or
credited to the Consolidated Statement of Comprehensive Income or charged or credited directly in equity.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-630": { "value": "
Foreign exchange and exchange rates
Foreign currency transactions are translated into the functional currency using the exchange rate prevailing at the date of the transactions.
The\u00a0functional currency of the Group\u2019s foreign operations is the currency of the primary economic environment in which the entity operates.
The\u00a0assets and liabilities of all of the Group\u2019s foreign operations are translated into sterling, the Group\u2019s presentation currency, at the closing
rate\u00a0at\u00a0the date of the Consolidated Balance Sheet. Income and expenses are translated at average exchange rates. On consolidation,
exchange differences arising from the translation of the net investment in foreign entities and of borrowings and other currency instruments
designated as\u00a0hedges of such investments, are taken to a separate component of shareholders\u2019 equity.
Foreign exchange gains and losses are recognised in the Consolidated Income Statement, except when recognised in equity as qualifying
cash flow or net investment hedges.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFunctionalCurrencyExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-629": { "value": "
Foreign exchange and exchange rates
Foreign currency transactions are translated into the functional currency using the exchange rate prevailing at the date of the transactions.
The\u00a0functional currency of the Group\u2019s foreign operations is the currency of the primary economic environment in which the entity operates.
The\u00a0assets and liabilities of all of the Group\u2019s foreign operations are translated into sterling, the Group\u2019s presentation currency, at the closing
rate\u00a0at\u00a0the date of the Consolidated Balance Sheet. Income and expenses are translated at average exchange rates. On consolidation,
exchange differences arising from the translation of the net investment in foreign entities and of borrowings and other currency instruments
designated as\u00a0hedges of such investments, are taken to a separate component of shareholders\u2019 equity.
Foreign exchange gains and losses are recognised in the Consolidated Income Statement, except when recognised in equity as qualifying
cash flow or net investment hedges.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-631": { "value": "
Share-based payments
The Group accounts for options and awards under equity compensation plans, until such time as they are fully vested, using the fair value
based\u00a0method of accounting. The fair value at the date of grant of the equity instrument is recognised as an expense, spread over the vesting
period of the instrument. The total amount to be expensed is determined by reference to the fair value of the awards, excluding the impact of
any\u00a0non-market vesting conditions. At each balance sheet date, the Group revises its estimate of the number of equity instruments which are
expected to become exercisable. It recognises the impact of the revision of original estimates, if any, in the Consolidated Income Statement
and a\u00a0corresponding adjustment is made to equity. On vesting or exercise, the difference between the expense charged to the Consolidated
Income Statement and the actual cost to the Group is\u00a0transferred to Retained earnings. Where new shares are issued, the proceeds received
are credited to Share capital and Share premium.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-633": { "value": "
Share capital, share premium and employee scheme treasury shares
An equity instrument is any contract which evidences a residual interest in the net assets of an entity. It follows that a financial instrument
is\u00a0treated as equity if:
\u2022 there is no contractual obligation to deliver cash or other financial assets or to exchange financial assets or liabilities on unfavourable
terms
\u2022 the instrument is either a non-derivative which contains no contractual obligation to deliver a variable number of own equity instruments,
or\u00a0is\u00a0a\u00a0derivative which will be settled only by the Group exchanging a fixed amount of cash, or other financial assets, for a fixed number
of\u00a0its\u00a0own equity instruments.
Where any Group entity purchases the Company\u2019s equity share capital, the consideration paid, including any directly attributable
incremental costs\u00a0(net of income taxes), is deducted from equity attributable to shareholders. Where such shares are subsequently
sold, reissued or otherwise\u00a0disposed of, any consideration received is included in equity attributable to shareholders, net of any directly
attributable incremental transaction costs and the related income tax effects. Shares held on behalf of employee share schemes are
disclosed as such on the Consolidated Balance Sheet.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTreasurySharesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-632": { "value": "
Share capital, share premium and employee scheme treasury shares
An equity instrument is any contract which evidences a residual interest in the net assets of an entity. It follows that a financial instrument
is\u00a0treated as equity if:
\u2022 there is no contractual obligation to deliver cash or other financial assets or to exchange financial assets or liabilities on unfavourable
terms
\u2022 the instrument is either a non-derivative which contains no contractual obligation to deliver a variable number of own equity instruments,
or\u00a0is\u00a0a\u00a0derivative which will be settled only by the Group exchanging a fixed amount of cash, or other financial assets, for a fixed number
of\u00a0its\u00a0own equity instruments.
Where any Group entity purchases the Company\u2019s equity share capital, the consideration paid, including any directly attributable
incremental costs\u00a0(net of income taxes), is deducted from equity attributable to shareholders. Where such shares are subsequently
sold, reissued or otherwise\u00a0disposed of, any consideration received is included in equity attributable to shareholders, net of any directly
attributable incremental transaction costs and the related income tax effects. Shares held on behalf of employee share schemes are
disclosed as such on the Consolidated Balance Sheet.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIssuedCapitalExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-634": { "value": "
Fiduciary activities
Assets associated with fiduciary activities and the income arising from those assets, together with associated commitments to return such
assets to customers, are not included in these financial statements. Where the Group acts in a fiduciary capacity, for instance as a trustee
or\u00a0agent, it has no contractual rights over the assets concerned.
", "dimensions": { "concept": "legalandgeneral:DescriptionOfAccountingPolicyForFiduciaryActivities", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-635": { "value": "
(ix) Foreign exchange and exchange rates
The principal foreign exchange rates used for translation are:
Year end exchange rates
2025
2024
US Dollar
1.35
1.25
Euro
1.15
1.21
Average exchange rates
2025
2024
US Dollar
1.32
1.28
Euro
1.17
1.18
(ii) Currency risk
The Group has minimal exposure to currency risk from financial instruments held by business units in currencies other than their functional
currencies, nearly all such holdings are either backing insurance contracts in the same currency or are hedged back to GBP.
The Group operates internationally and as a result is exposed to foreign currency exchange risk arising from fluctuations in exchange rates of
various currencies. The largest US Dollar currency exposures relate to the Group\u2019s US business, which is classified as a held for sale disposal
group, The majority of currency exposures relating to Euros are held by LGIM Managers (Europe) Limited, a subsidiary of L&G \u2013 Asset
Management Limited. The Group does not hedge foreign currency revenues as these are substantially retained locally to support the growth
of the Group\u2019s business and meet local regulatory and market requirements.
Businesses aim to maintain sufficient assets in local currency to meet local currency liabilities. However, movements may impact the value of
the Group\u2019s consolidated shareholders\u2019 equity which is expressed in Sterling. This aspect of foreign exchange risk is monitored and managed
centrally, against pre-determined limits. These exposures are managed by aligning the deployment of regulatory capital by currency with
he Group\u2019s regulatory capital requirements by currency. Currency borrowings and derivatives may be used to manage exposures within the
limits that have been set. Hedge accounting is currently applied by the Group in order to hedge foreign exchange translation risk on its fixed
rate USD and EUR denominated borrowings through cross-currency swap contracts. Additionally, the Group has hedged the forecast sale
proceeds arising from the disposal of Legal & General America Inc. through forward exchange contracts. Refer to Note 14 for further details.
As at 31 December 2025, the Group held net assets of \u00a33.2bn (2024: net liabilities of \u00a31.5bn) of its total equity attributable to shareholders
in currencies, mainly US Dollar and Euro, other than the functional currency of the relevant business unit. The exchange risks inherent
in\u00a0these exposures may be mitigated through the use of derivatives, mainly forward currency contracts.
Consistent with the Group\u2019s accounting policies, the profits of overseas business units (reported as functional currencies) are translated at
average exchange rates and the net assets (reported as functional currencies) at the closing rate for the reporting period. Information on
the Group\u2019s assets for the current year includes only continuing operations. It therefore excludes contracts associated with the Group\u2019s US
insurance entity, which are classified as assets and liabilities held for sale in the Consolidated Balance Sheet.
A 10% increase (weakening of foreign currencies) or decrease (strengthening of foreign currencies) in these rates would increase or reduce
the profit for the year and net assets as follows:
A 10% increase in
A 10% decrease in
USD:GBP exchange rate
USD:GBP exchange rate
2025
2024
2025
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Profit for the year1
5
(7)
(6)
9
Net assets attributable to USD exposures 1
(158)
(92)
193
111
A 10% increase in
A 10% decrease in
EUR:GBP exchange rate
EUR:GBP exchange rate
2025
2024
2025
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Profit for the year1
\u2013
\u2013
\u2013
\u2013
Net assets attributable to EUR exposures 1
(98)
(17)
120
22
1. Profit for the year impacts relate only to overseas business units where the functional currency is not Sterling. Net asset impacts include both functional currency and non-functional
currency exposures.
A 10% increase or decrease in the USD:GBP rate would impact the profit for the year of operations classified as held for sale by \u00a3(11)m and
\u00a313m respectively and impact net assets by \u00a3(59)m and \u00a372m respectively.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEffectOfChangesInForeignExchangeRatesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-638": { "value": "
2. Supplementary adjusted operating profit information
(i) Adjusted operating profit
2025
2024
For the year ended 31 December 2025
Notes
\u00a3m
\u00a3m
Institutional Retirement1
2(ii)
1,168
1,097
Asset Management
2(iii)
402
401
Retail
2(ii)
447
430
Insurance1
119
114
Retail Retirement
328
316
Group debt costs2
(229)
(216)
Group investment projects and expenses
(165)
(178)
Core operating profit 1
1,623
1,534
Non-retained US business1
90
82
Corporate Investments
43
95
Total adjusted operating profit
1,756
1,711
Investment variance
2(iv)
(771)
(1,196)
M&A and restructuring 3
(202)
(187)
Profits attributable to non-controlling interests
24
4
Adjusted profit before tax attributable to equity holders
807
332
Tax expense attributable to equity holders
31
(191)
(137)
Profit for the year
616
195
Less: Profit after tax from discontinued operations
(96)
(65)
Total tax expense from continuing operations
304
318
Profit before tax from continuing operations
824
448
Profit attributable to equity holders
592
191
Earnings per share:
Core operating (pence per share)1,4
7
20.93
19.20
Basic (pence per share) 4
7
9.99
2.89
Diluted (pence per share) 4
7
9.74
2.86
1. Comparative amounts for Institutional Retirement and Insurance, which are components of core operating profit and core operating EPS, have been restated. Refer to Note 1 for further details.
2. Group debt costs exclude interest on non-recourse financing.
3. M&A and restructuring costs comprise one\u2011off project expenses related to mergers, acquisitions, disposals and organisational restructuring activities. In 2025, these costs include
expenses associated with the disposal of the Group\u2019s US insurance entity, as well as transformation initiatives, including costs linked to the extension of Asset Management\u2019s
partnership with State Street. In 2024, they include \u00a399m relating to the disposal of Cala.
4. These earnings per share calculations are based on profit attributable to equity holders of the Company derived from continuing and discontinued operations.
This supplementary adjusted operating profit information (one of the Group\u2019s key performance indicators) provides additional analysis of the
results reported under IFRS and the Group believes that it provides stakeholders with useful information to enhance their understanding of
the\u00a0performance of the business in the year. Core operating profit measures the operating performance of the Group\u2019s core businesses and
is\u00a0therefore calculated as the Group\u2019s adjusted operating profit excluding the adjusted operating profit of the Corporate Investments unit and
Non-retained US business.
Adjusted operating profit measures the pre-tax result excluding the impact of investment volatility, economic assumption changes caused by
changes in market conditions or expectations and exceptional items. Adjusted operating profit for insurance contracts primarily reflects the
release of profit from the contractual service margin and risk adjustment in the year (adjusted for reinsurance mismatches), the unwind of the
discount rate used in the calculation of the insurance liabilities and incurred expenses that are not directly attributable to the insurance contracts.
To remove investment volatility, adjusted operating profit reflects long-term expected investment returns on the substantial majority of
investments held by the Group, including both traded and private market investments. For the remainder of the asset portfolio, including
certain operational businesses in Asset Management and, up to its disposal on 31 October 2024, CALA Group (Holdings) Limited (Cala),
no adjustments are made to exclude investment volatility. The investment margin for insurance business therefore reflects the expected
investment return above the unwind of the insurance liability discount rate.
The long-term expected investment return reflects the best estimate of the long-term return at the start of the year, as follows:
\u2022 expected returns for traded equity, commercial property and residential property (including lifetime mortgages) are based on market
consensus forecasts and long-term historic average returns expected to apply through the cycle
\u2022 assumptions for fixed interest securities measured at FVTPL are based on asset yields for the assets held, less an adjustment for credit risk
(assessed on a best estimate basis). Where securities are measured at amortised cost or FVOCI, the expected investment return comprises
interest income on an effective interest rate basis
\u2022 equity direct investments incorporate investments in real estate, infrastructure, private credit and venture capital. Where used for the
determination of adjusted operating profit, the long-term expected investment return is on average between 10% and 12%
(2024: 10% and 12%). Rates of return specific to each asset are determined at the point of underwriting and reviewed and updated
annually. The rate of return for assets belonging to Corporate Investments is determined at a portfolio level and is updated annually if
required. The expected investment return includes current financial assumptions as well as sector specific assumptions, including retail
and commercial property yields and power prices where appropriate.
The long-term expectations used in determining the expected investment returns for traded equity and property assets are:
2025
2024
Equity returns
7%
7%
Commercial property growth
5%
5%
Residential property growth
3.5%
3.5%
Variances between actual and long-term expected investment returns are excluded from adjusted operating profit, as are economic
assumption changes to insurance contract liabilities caused by movements in market conditions or expectations (e.g. credit default and
inflation) and any difference between the actual allocated asset mix and the target long-term asset mix on new pension risk transfer
business. Assets held for future\u00a0new pension risk transfer business are excluded from the asset portfolio used to determine the discount
rate for annuities on insurance contract liabilities. The impact of investment management actions that optimise the yield of the assets
backing the back book of annuity contracts is\u00a0included within adjusted operating profit.
M&A and restructuring includes exceptional income and expenses which arise outside the normal course of business in the year, such
as disposals gains and losses, restructuring and mergers and acquisition costs.
(ii) Analysis of Institutional Retirement and Retail adjusted operating profit
Institutional
Retirement
Retail
Institutional
Retirement 5
Retail5
2025
2025
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Amortisation of the CSM in the year1
667
396
643
371
Release of risk adjustment in the year
132
79
140
77
Experience variances
(12)
\u2013
(10)
(11)
Development of losses on onerous contracts 2
\u2013
(5)
\u2013
(1)
Other expenses 3
(172)
(117)
(161)
(99)
Insurance investment margin4
548
141
479
127
Investment contracts and non-insurance operating profit
5
(47)
6
(34)
Total Institutional Retirement and Retail adjusted operating profit
1,168
447
1,097
430
1. Contractual service margin (CSM) amortisation for Retail has been reduced by \u00a316m (2024: \u00a318m) to exclude the impact of reinsurance mismatches.
2. Development of losses on onerous contracts has been adjusted by \u00a313m to remove the reversal of gross contract losses that were excluded from adjusted operating profit in previous
periods. In 2024, \u00a335m of gross contract losses were excluded from adjusted operating profit where, net of reinsurance, the contracts remained profitable to remove gross contract
losses where, net of reinsurance, the contracts remain profitable. These accounting losses will be presented as a reduction to the CSM amortisation in future periods.
3. Other expenses are non-attributable expenses on both new business and existing business. These are overhead costs which are not allowed for in the best estimate liability unit cost
assumptions and instead are reported within the Consolidated Income Statement as part of the profit or loss for the year.
4. Insurance investment margin comprises the expected investment return on assets backing insurance contract liabilities, the unwind of the discount rate on insurance contract liabilities
and the optimisation of the assets backing the annuity back book.\u00a0
5. Comparative amounts have been restated. Refer to Note 1 for further details.
(iii) Asset Management adjusted operating profit
2025
20242
\u00a3m
\u00a3m
Management fee revenue (excluding third-party market data)1,2
1,022
976
Transactional revenue 3
16
20
Expenses (excluding third-party market data) 1,2
(780)
(740)
Adjusted operating profit from fee-related earnings
258
256
Adjusted operating profit from balance sheet investments4
144
145
Total Asset Management adjusted operating profit
402
401
1. Asset Management revenue has been presented net of costs of \u00a331m (2024: \u00a330m) in relation to the provision of third-party market data.
2. Asset Management revenue and expenses include, but not limited to, investment management activities that the division undertakes on behalf of other Group businesses. Consistent
with Note 2(v), these activities are presented in the table above on a gross basis. The comparatives for 2024, which previously showed certain of these activities on a net basis, have
been re-presented accordingly.
3. Transactional revenue from external clients includes execution fees, asset transition income, trigger fees, arrangement fees on property transactions and performance fees.
4. Earnings from balance sheet investments across real estate, infrastructure, private credit and venture capital.
(iv) Investment variance
2025
2024
\u00a3m
\u00a3m
Shareholder assets
In year versus expected returns1
(240)
(224)
Asset revaluations 2
(304)
(322)
Insurance business
Economic impacts on insurance business 3
105
(362)
Modelling and assumption changes4
(285)
(214)
Reinsurance mismatches5
28
(17)
Other non-operating items
(75)
(57)
Investment variance
(771)
(1,196)
1. Represents the in year variance between actual and longer-term expected returns on shareholder assets, in particular those held in Asset Management and Corporate Investments.
2. Asset revaluations in both 2024 and 2025 include in year write-downs of a number of Private Markets assets that have been adversely impacted by wider macroeconomic trends,
particularly in real estate and growth equity sectors. \u00a3110m of these write-downs have arisen in the Corporate Investments unit, which represents assets that are no longer deemed
strategic to the Group, including a small number of assets that were transferred from Asset Management in Q4 2025, following the completion of the strategic review undertaken by
the CEO of the Asset Management business.
3. Economic impacts arising on insurance business in 2025 reflect the positive impacts of changes in interest rates and inflation, partially offset by other economics including property
returns. In 2024, annuity business was adversely impacted by increases in interest rates and inflation expectations.
4. Primarily reflects the impact of the difference between locked and current rates on assumption and modelling changes, particularly in respect of annuity liabilities. In 2025, it also
includes \u00a3(29)m arising from an action to reduce the cost of reinsurance. 2024 was impacted by a higher level of assumption changes related to longevity. Modelling and assumption
changes have increased CSM in 2025 by \u00a3290m (2024: \u00a3195m) which will be earned back in future periods.
5. Reinsurance mismatches were positive, reflecting the adjustment to reported CSM amortisation within operating profit and the reversal of past onerous contract losses.
Investment variance includes differences between actual and long-term expected investment return on traded and non-traded assets, the
impact of economic assumption changes caused by changes in market conditions or expectations (e.g. credit default and inflation), the impact
of any difference between the actual allocated asset mix and the target long-term asset mix on new pension risk transfer business and the
yield associated with assets held for future new pension risk transfer business. Note 2(i) includes details around the determination of the
long-term expected investment return in the calculation of adjusted operating profit.
Changes in non-financial assumptions, including longevity, recalibrate the CSM at locked-in, point-of-sale discount rates, whilst the
fulfilment cash flows change at the current discount rate. This creates a component of investment variance reflecting the difference
between these bases.
For the Group\u2019s long-term insurance businesses, reinsurance mismatches can arise where the reinsurance offset rules in IFRS 17 do not
reflect management\u2019s view of the net of reinsurance transaction. In particular, during a year of reinsurance renegotiation, reinsurance gains
cannot be recognised to offset any inception losses on the underlying contracts where they are recognised before the new reinsurance
agreement is signed. In these circumstances, the onerous contract losses are reduced to reflect the net loss (if any) after reinsurance and
future contractual service margin (CSM) amortisation is reduced over the duration of the contracts. Additionally, in some circumstances,
profitable reinsurance does not mitigate onerous losses on gross contracts whilst the net position remains profitable. Where this is the
case, onerous contract profits or losses are also presented below adjusted operating profit and the CSM amortisation is adjusted over the
remaining duration of the contracts.
(v) Segmental analysis
The Group has five reportable segments, comprising Institutional Retirement, Asset Management, Insurance, Retail Retirement and Corporate
Investments. As explained in Note 1, as a result of the sale of the Group\u2019s US insurance entity (completed in February 2026), the composition of the
Group\u2019s reportable segments has changed. After completion, the Group is no longer exposed to its US protection business and to 20% of its US PRT
business. Their contribution to the Group is therefore excluded from the results of the Insurance and Institutional Retirement segments respectively
and reported separately as Non-retained US business. Prior year comparatives have been restated accordingly.
Group expenses, debt costs and assets held centrally are reported separately. Transactions between segments are on normal commercial
terms and are included within the reported segments.
In the UK, annuity liabilities relating to Institutional Retirement and Retail Retirement are backed by a single portfolio of assets and once a
transaction has been completed the assets relating to any particular transaction are not tracked to the related liabilities. Investment variance
is allocated to the two business segments based on the relative size of the underlying insurance contract liabilities.
Reporting of assets and liabilities by reportable segment has not been included, as this is not information that is provided to key decision
makers on a regular basis. The Group\u2019s assets and liabilities are managed on a legal entity rather than a segment basis, in line with
regulatory requirements.
Financial information on the reportable segments is further broken down where relevant in order to better explain the drivers of the Group\u2019s results.
(a) Profit/(loss) for the year
Institutional
Retirement
Asset
Management
Insurance
Retail
Retirement
Group
expenses
and debt
costs
Total Core
Corporate
Investments
Non-
retained US
business
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Adjusted operating profit/(loss)
1,168
402
119
328
(394)
1,623
43
90
1,756
Investment variance
(250)
(236)
12
(74)
(43)
(591)
(167)
(13)
(771)
M&A and restructuring
(1)
(94)
(6)
(5)
(81)
(187)
(15)
\u2013
(202)
Profits attributable to non-controlling interests
\u2013
\u2013
\u2013
\u2013
24
24
\u2013
\u2013
24
Profit/(loss) before tax attributable to equity holders
917
72
125
249
(494)
869
(139)
77
807
Tax (expense)/credit attributable to equity holders
(192)
(24)
(31)
(49)
105
(191)
14
(14)
(191)
Profit/(loss) for the year
725
48
94
200
(389)
678
(125)
63
616
Attributable to:
Continuing operations
520
Discontinued operations 1
96
Institutional
Retirement
Asset
Management
Insurance
Retail
Retirement
Group
expenses
and debt
costs
Total Core
Corporate
Investments
Non-
retained US
business
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Adjusted operating profit/(loss)
1,097
401
114
316
(394)
1,534
95
82
1,711
Investment variance
(553)
(161)
(30)
(157)
(23)
(924)
(248)
(24)
(1,196)
M&A and restructuring
\u2013
(29)
\u2013
\u2013
(18)
(47)
(140)
\u2013
(187)
Profits attributable to non-controlling interests
\u2013
\u2013
\u2013
\u2013
4
4
\u2013
\u2013
4
Profit/(loss) before tax attributable to equity holders
544
211
84
159
(431)
567
(293)
58
332
Tax (expense)/credit attributable to equity holders
(131)
(46)
(30)
(37)
118
(126)
\u2013
(11)
(137)
Profit/(loss) for the year
413
165
54
122
(313)
441
(293)
47
195
Attributable to:
Continuing operations
130
Discontinued operations 1
65
1. Discontinued operations include the total amount of the Group\u2019s US protection and US pension risk transfer businesses. Refer to Note 1 for further details.
(b) Total revenue \u2013 summary
Total revenue includes insurance revenue, fees from fund management and investment contracts and other operational income from
contracts with customers. Further details on the components of insurance revenue are disclosed in Note 22. Other operational income from
contracts with customers is a component of other operational income and excludes the share of profit/loss from associates and joint ventures,
as well as gains/losses on disposal of subsidiaries, associates, joint ventures and other operations. Information on revenue is provided for
continuing operations only and therefore excludes any revenue related to the Group's US insurance entity, as described in Note 1. Prior year
comparatives have been adjusted accordingly.
The tables below split the revenue by the geographic location of the client.
United
Kingdom
USA
Rest of
World
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Insurance revenue
9,056
\u2013
166
9,222
Fees from fund management and investment contracts
724
75
109
908
Other operational income from contracts with customers
331
1
\u2013
332
Total revenue
10,111
76
275
10,462
United
Kingdom
USA
Rest of
World
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Insurance revenue
8,419
\u2013
123
8,542
Fees from fund management and investment contracts
702
83
79
864
Other operational income from contracts with customers
1,249
2
\u2013
1,251
Total revenue
10,370
85
202
10,657
(c) Total revenue \u2013 internal/external analysis
Institutional
Retirement
Asset
Management1
Insurance
Retail
Retirement
Corporate
Investments\u00a0
and other 2
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Internal revenue3
\u2013
227
\u2013
\u2013
(227)
\u2013
External revenue
5,643
879
2,147
1,719
74
10,462
Total revenue
5,643
1,106
2,147
1,719
(153)
10,462
Institutional
Retirement
Asset
Management1
Insurance
Retail
Retirement
Corporate
Investments\u00a0
and other 2
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Internal revenue3
\u2013
215
\u2013
\u2013
(215)
\u2013
External revenue
5,235
849
1,984
1,584
1,005
10,657
Total revenue
5,235
1,064
1,984
1,584
790
10,657
1. Asset Management internal revenue relates to investment management services provided to other segments.
2. Other includes inter-segmental eliminations and Group consolidation adjustments.
3. Asset Management revenue includes the investment management activities that the division undertakes on behalf of other Group businesses. The revenue for the most significant
portion of these activities is included in the above table on a gross basis. Any additional services provided by Asset Management to other divisions are eliminated in the segmental
disclosures and presented on a gross basis. The comparatives for 2024, which previously showed certain of these activities on a net basis, have been re-presented accordingly.
(d) Fees from fund management and investment contracts
Fees from fund management and investment contracts include fees for administration and managing of funds in pension plans, as well
as\u00a0revenue generated from acting as the investment manager for clients. Transaction fees are charged to implement trades for clients.
Asset
Management
Retail
Retirement
Corporate
Investments\u00a0
and other 1
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Investment contracts and management fees 2
970
138
(219)
889
Transaction fees
19
\u2013
\u2013
19
Total fees from fund management and investment contracts
989
138
(219)
908
Asset
Management
Retail
Retirement
Corporate
Investments\u00a0
and other 1
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Investment contracts and management fees 2
930
122
(207)
845
Transaction fees
19
\u2013
\u2013
19
Total fees from fund management and investment contracts
949
122
(207)
864
1. Other includes inter-segmental eliminations and Group consolidation adjustments.
2. Asset Management revenue includes the investment management activities that the division undertakes on behalf of other Group businesses. The revenue for the most significant
portion of these activities is included in the above table on a gross basis. Any additional services provided by Asset Management to other divisions are eliminated in the segmental
disclosures and presented on a gross basis. The comparatives for 2024, which previously showed certain of these activities on a net basis, have been re-presented accordingly.
(e) Other operational income from contracts with customers
Other operational income from contracts with customers includes house building revenue, revenue arising from professional services and
insurance broker fees.
Institutional
Retirement
Asset
Management
Insurance
Retail
Retirement
Corporate
Investments\u00a0
and other 1
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
House building
7
104
\u2013
\u2013
61
172
Professional services fees
\u2013
13
58
6
5
82
Insurance broker
\u2013
\u2013
78
\u2013
\u2013
78
Total other operational income from contracts with customers2
7
117
136
6
66
332
Institutional
Retirement
Asset
Management
Insurance
Retail
Retirement
Corporate
Investments\u00a0
and other 1
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
House building
14
100
\u2013
\u2013
984
1,098
Professional services fees
\u2013
14
51
6
13
84
Insurance broker
\u2013
\u2013
68
\u2013
\u2013
68
Total other operational income from contracts with customers2
14
114
119
6
997
1,250
1. Other includes inter-segmental eliminations and Group consolidation adjustments.
2. Total other operational income from contracts with customers excludes the share of profit/loss from associates and joint ventures and the gain on disposal of subsidiaries, associates and
joint ventures.
5. Insurance service and other expenses
2025
20241
Notes
\u00a3m
\u00a3m
Claims and benefits
6,912
6,395
Fees and commissions
500
308
Losses and reversals of losses on onerous contracts
(415)
281
Loss on disposal of subsidiaries2
19
77
Staff costs (including pension costs and share-based payments)
33
1,171
1,174
Redundancy costs
20
15
Auditor\u2019s remuneration
32
19
17
Depreciation and impairment of plant and equipment
12
44
60
Amortisation and impairment of intangible assets
11
57
50
House building expenses 3
232
945
Other administrative expenses
908
831
Amounts attributed to insurance acquisition cash flows incurred during the year
22(ix)(a)
(231)
(229)
Amortisation of insurance acquisition expenses
22(iii)(a),22(v)(a)
121
110
Total Insurance service and other expenses
9,357
10,034
Represented by:
Insurance service expenses
7,191
7,235
Other expenses
2,166
2,799
Total Insurance service and other expenses
9,357
10,034
1. Comparative information has been re-presented to reflect the results of the US protection and US pension risk transfer (PRT) business as discontinued operations. See Note 1 for further
information.
2. 2024 loss on disposal of subsidiaries reflects the disposal of Cala.
3. House building expenses represent the cost of sales of the Group\u2019s house building businesses, including Cala in 2024. A total of \u00a3172m (2024: \u00a31,098m) of house building income has
been recognised in the year (see Note 2(v)(e)).
", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-637": { "value": "
2. Supplementary adjusted operating profit information
(i) Adjusted operating profit
2025
2024
For the year ended 31 December 2025
Notes
\u00a3m
\u00a3m
Institutional Retirement1
2(ii)
1,168
1,097
Asset Management
2(iii)
402
401
Retail
2(ii)
447
430
Insurance1
119
114
Retail Retirement
328
316
Group debt costs2
(229)
(216)
Group investment projects and expenses
(165)
(178)
Core operating profit 1
1,623
1,534
Non-retained US business1
90
82
Corporate Investments
43
95
Total adjusted operating profit
1,756
1,711
Investment variance
2(iv)
(771)
(1,196)
M&A and restructuring 3
(202)
(187)
Profits attributable to non-controlling interests
24
4
Adjusted profit before tax attributable to equity holders
807
332
Tax expense attributable to equity holders
31
(191)
(137)
Profit for the year
616
195
Less: Profit after tax from discontinued operations
(96)
(65)
Total tax expense from continuing operations
304
318
Profit before tax from continuing operations
824
448
Profit attributable to equity holders
592
191
Earnings per share:
Core operating (pence per share)1,4
7
20.93
19.20
Basic (pence per share) 4
7
9.99
2.89
Diluted (pence per share) 4
7
9.74
2.86
1. Comparative amounts for Institutional Retirement and Insurance, which are components of core operating profit and core operating EPS, have been restated. Refer to Note 1 for further details.
2. Group debt costs exclude interest on non-recourse financing.
3. M&A and restructuring costs comprise one\u2011off project expenses related to mergers, acquisitions, disposals and organisational restructuring activities. In 2025, these costs include
expenses associated with the disposal of the Group\u2019s US insurance entity, as well as transformation initiatives, including costs linked to the extension of Asset Management\u2019s
partnership with State Street. In 2024, they include \u00a399m relating to the disposal of Cala.
4. These earnings per share calculations are based on profit attributable to equity holders of the Company derived from continuing and discontinued operations.
This supplementary adjusted operating profit information (one of the Group\u2019s key performance indicators) provides additional analysis of the
results reported under IFRS and the Group believes that it provides stakeholders with useful information to enhance their understanding of
the\u00a0performance of the business in the year. Core operating profit measures the operating performance of the Group\u2019s core businesses and
is\u00a0therefore calculated as the Group\u2019s adjusted operating profit excluding the adjusted operating profit of the Corporate Investments unit and
Non-retained US business.
Adjusted operating profit measures the pre-tax result excluding the impact of investment volatility, economic assumption changes caused by
changes in market conditions or expectations and exceptional items. Adjusted operating profit for insurance contracts primarily reflects the
release of profit from the contractual service margin and risk adjustment in the year (adjusted for reinsurance mismatches), the unwind of the
discount rate used in the calculation of the insurance liabilities and incurred expenses that are not directly attributable to the insurance contracts.
To remove investment volatility, adjusted operating profit reflects long-term expected investment returns on the substantial majority of
investments held by the Group, including both traded and private market investments. For the remainder of the asset portfolio, including
certain operational businesses in Asset Management and, up to its disposal on 31 October 2024, CALA Group (Holdings) Limited (Cala),
no adjustments are made to exclude investment volatility. The investment margin for insurance business therefore reflects the expected
investment return above the unwind of the insurance liability discount rate.
The long-term expected investment return reflects the best estimate of the long-term return at the start of the year, as follows:
\u2022 expected returns for traded equity, commercial property and residential property (including lifetime mortgages) are based on market
consensus forecasts and long-term historic average returns expected to apply through the cycle
\u2022 assumptions for fixed interest securities measured at FVTPL are based on asset yields for the assets held, less an adjustment for credit risk
(assessed on a best estimate basis). Where securities are measured at amortised cost or FVOCI, the expected investment return comprises
interest income on an effective interest rate basis
\u2022 equity direct investments incorporate investments in real estate, infrastructure, private credit and venture capital. Where used for the
determination of adjusted operating profit, the long-term expected investment return is on average between 10% and 12%
(2024: 10% and 12%). Rates of return specific to each asset are determined at the point of underwriting and reviewed and updated
annually. The rate of return for assets belonging to Corporate Investments is determined at a portfolio level and is updated annually if
required. The expected investment return includes current financial assumptions as well as sector specific assumptions, including retail
and commercial property yields and power prices where appropriate.
The long-term expectations used in determining the expected investment returns for traded equity and property assets are:
2025
2024
Equity returns
7%
7%
Commercial property growth
5%
5%
Residential property growth
3.5%
3.5%
Variances between actual and long-term expected investment returns are excluded from adjusted operating profit, as are economic
assumption changes to insurance contract liabilities caused by movements in market conditions or expectations (e.g. credit default and
inflation) and any difference between the actual allocated asset mix and the target long-term asset mix on new pension risk transfer
business. Assets held for future\u00a0new pension risk transfer business are excluded from the asset portfolio used to determine the discount
rate for annuities on insurance contract liabilities. The impact of investment management actions that optimise the yield of the assets
backing the back book of annuity contracts is\u00a0included within adjusted operating profit.
M&A and restructuring includes exceptional income and expenses which arise outside the normal course of business in the year, such
as disposals gains and losses, restructuring and mergers and acquisition costs.
(ii) Analysis of Institutional Retirement and Retail adjusted operating profit
Institutional
Retirement
Retail
Institutional
Retirement 5
Retail5
2025
2025
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Amortisation of the CSM in the year1
667
396
643
371
Release of risk adjustment in the year
132
79
140
77
Experience variances
(12)
\u2013
(10)
(11)
Development of losses on onerous contracts 2
\u2013
(5)
\u2013
(1)
Other expenses 3
(172)
(117)
(161)
(99)
Insurance investment margin4
548
141
479
127
Investment contracts and non-insurance operating profit
5
(47)
6
(34)
Total Institutional Retirement and Retail adjusted operating profit
1,168
447
1,097
430
1. Contractual service margin (CSM) amortisation for Retail has been reduced by \u00a316m (2024: \u00a318m) to exclude the impact of reinsurance mismatches.
2. Development of losses on onerous contracts has been adjusted by \u00a313m to remove the reversal of gross contract losses that were excluded from adjusted operating profit in previous
periods. In 2024, \u00a335m of gross contract losses were excluded from adjusted operating profit where, net of reinsurance, the contracts remained profitable to remove gross contract
losses where, net of reinsurance, the contracts remain profitable. These accounting losses will be presented as a reduction to the CSM amortisation in future periods.
3. Other expenses are non-attributable expenses on both new business and existing business. These are overhead costs which are not allowed for in the best estimate liability unit cost
assumptions and instead are reported within the Consolidated Income Statement as part of the profit or loss for the year.
4. Insurance investment margin comprises the expected investment return on assets backing insurance contract liabilities, the unwind of the discount rate on insurance contract liabilities
and the optimisation of the assets backing the annuity back book.\u00a0
5. Comparative amounts have been restated. Refer to Note 1 for further details.
(iii) Asset Management adjusted operating profit
2025
20242
\u00a3m
\u00a3m
Management fee revenue (excluding third-party market data)1,2
1,022
976
Transactional revenue 3
16
20
Expenses (excluding third-party market data) 1,2
(780)
(740)
Adjusted operating profit from fee-related earnings
258
256
Adjusted operating profit from balance sheet investments4
144
145
Total Asset Management adjusted operating profit
402
401
1. Asset Management revenue has been presented net of costs of \u00a331m (2024: \u00a330m) in relation to the provision of third-party market data.
2. Asset Management revenue and expenses include, but not limited to, investment management activities that the division undertakes on behalf of other Group businesses. Consistent
with Note 2(v), these activities are presented in the table above on a gross basis. The comparatives for 2024, which previously showed certain of these activities on a net basis, have
been re-presented accordingly.
3. Transactional revenue from external clients includes execution fees, asset transition income, trigger fees, arrangement fees on property transactions and performance fees.
4. Earnings from balance sheet investments across real estate, infrastructure, private credit and venture capital.
(iv) Investment variance
2025
2024
\u00a3m
\u00a3m
Shareholder assets
In year versus expected returns1
(240)
(224)
Asset revaluations 2
(304)
(322)
Insurance business
Economic impacts on insurance business 3
105
(362)
Modelling and assumption changes4
(285)
(214)
Reinsurance mismatches5
28
(17)
Other non-operating items
(75)
(57)
Investment variance
(771)
(1,196)
1. Represents the in year variance between actual and longer-term expected returns on shareholder assets, in particular those held in Asset Management and Corporate Investments.
2. Asset revaluations in both 2024 and 2025 include in year write-downs of a number of Private Markets assets that have been adversely impacted by wider macroeconomic trends,
particularly in real estate and growth equity sectors. \u00a3110m of these write-downs have arisen in the Corporate Investments unit, which represents assets that are no longer deemed
strategic to the Group, including a small number of assets that were transferred from Asset Management in Q4 2025, following the completion of the strategic review undertaken by
the CEO of the Asset Management business.
3. Economic impacts arising on insurance business in 2025 reflect the positive impacts of changes in interest rates and inflation, partially offset by other economics including property
returns. In 2024, annuity business was adversely impacted by increases in interest rates and inflation expectations.
4. Primarily reflects the impact of the difference between locked and current rates on assumption and modelling changes, particularly in respect of annuity liabilities. In 2025, it also
includes \u00a3(29)m arising from an action to reduce the cost of reinsurance. 2024 was impacted by a higher level of assumption changes related to longevity. Modelling and assumption
changes have increased CSM in 2025 by \u00a3290m (2024: \u00a3195m) which will be earned back in future periods.
5. Reinsurance mismatches were positive, reflecting the adjustment to reported CSM amortisation within operating profit and the reversal of past onerous contract losses.
Investment variance includes differences between actual and long-term expected investment return on traded and non-traded assets, the
impact of economic assumption changes caused by changes in market conditions or expectations (e.g. credit default and inflation), the impact
of any difference between the actual allocated asset mix and the target long-term asset mix on new pension risk transfer business and the
yield associated with assets held for future new pension risk transfer business. Note 2(i) includes details around the determination of the
long-term expected investment return in the calculation of adjusted operating profit.
Changes in non-financial assumptions, including longevity, recalibrate the CSM at locked-in, point-of-sale discount rates, whilst the
fulfilment cash flows change at the current discount rate. This creates a component of investment variance reflecting the difference
between these bases.
For the Group\u2019s long-term insurance businesses, reinsurance mismatches can arise where the reinsurance offset rules in IFRS 17 do not
reflect management\u2019s view of the net of reinsurance transaction. In particular, during a year of reinsurance renegotiation, reinsurance gains
cannot be recognised to offset any inception losses on the underlying contracts where they are recognised before the new reinsurance
agreement is signed. In these circumstances, the onerous contract losses are reduced to reflect the net loss (if any) after reinsurance and
future contractual service margin (CSM) amortisation is reduced over the duration of the contracts. Additionally, in some circumstances,
profitable reinsurance does not mitigate onerous losses on gross contracts whilst the net position remains profitable. Where this is the
case, onerous contract profits or losses are also presented below adjusted operating profit and the CSM amortisation is adjusted over the
remaining duration of the contracts.
(v) Segmental analysis
The Group has five reportable segments, comprising Institutional Retirement, Asset Management, Insurance, Retail Retirement and Corporate
Investments. As explained in Note 1, as a result of the sale of the Group\u2019s US insurance entity (completed in February 2026), the composition of the
Group\u2019s reportable segments has changed. After completion, the Group is no longer exposed to its US protection business and to 20% of its US PRT
business. Their contribution to the Group is therefore excluded from the results of the Insurance and Institutional Retirement segments respectively
and reported separately as Non-retained US business. Prior year comparatives have been restated accordingly.
Group expenses, debt costs and assets held centrally are reported separately. Transactions between segments are on normal commercial
terms and are included within the reported segments.
In the UK, annuity liabilities relating to Institutional Retirement and Retail Retirement are backed by a single portfolio of assets and once a
transaction has been completed the assets relating to any particular transaction are not tracked to the related liabilities. Investment variance
is allocated to the two business segments based on the relative size of the underlying insurance contract liabilities.
Reporting of assets and liabilities by reportable segment has not been included, as this is not information that is provided to key decision
makers on a regular basis. The Group\u2019s assets and liabilities are managed on a legal entity rather than a segment basis, in line with
regulatory requirements.
Financial information on the reportable segments is further broken down where relevant in order to better explain the drivers of the Group\u2019s results.
(a) Profit/(loss) for the year
Institutional
Retirement
Asset
Management
Insurance
Retail
Retirement
Group
expenses
and debt
costs
Total Core
Corporate
Investments
Non-
retained US
business
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Adjusted operating profit/(loss)
1,168
402
119
328
(394)
1,623
43
90
1,756
Investment variance
(250)
(236)
12
(74)
(43)
(591)
(167)
(13)
(771)
M&A and restructuring
(1)
(94)
(6)
(5)
(81)
(187)
(15)
\u2013
(202)
Profits attributable to non-controlling interests
\u2013
\u2013
\u2013
\u2013
24
24
\u2013
\u2013
24
Profit/(loss) before tax attributable to equity holders
917
72
125
249
(494)
869
(139)
77
807
Tax (expense)/credit attributable to equity holders
(192)
(24)
(31)
(49)
105
(191)
14
(14)
(191)
Profit/(loss) for the year
725
48
94
200
(389)
678
(125)
63
616
Attributable to:
Continuing operations
520
Discontinued operations 1
96
Institutional
Retirement
Asset
Management
Insurance
Retail
Retirement
Group
expenses
and debt
costs
Total Core
Corporate
Investments
Non-
retained US
business
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Adjusted operating profit/(loss)
1,097
401
114
316
(394)
1,534
95
82
1,711
Investment variance
(553)
(161)
(30)
(157)
(23)
(924)
(248)
(24)
(1,196)
M&A and restructuring
\u2013
(29)
\u2013
\u2013
(18)
(47)
(140)
\u2013
(187)
Profits attributable to non-controlling interests
\u2013
\u2013
\u2013
\u2013
4
4
\u2013
\u2013
4
Profit/(loss) before tax attributable to equity holders
544
211
84
159
(431)
567
(293)
58
332
Tax (expense)/credit attributable to equity holders
(131)
(46)
(30)
(37)
118
(126)
\u2013
(11)
(137)
Profit/(loss) for the year
413
165
54
122
(313)
441
(293)
47
195
Attributable to:
Continuing operations
130
Discontinued operations 1
65
1. Discontinued operations include the total amount of the Group\u2019s US protection and US pension risk transfer businesses. Refer to Note 1 for further details.
(b) Total revenue \u2013 summary
Total revenue includes insurance revenue, fees from fund management and investment contracts and other operational income from
contracts with customers. Further details on the components of insurance revenue are disclosed in Note 22. Other operational income from
contracts with customers is a component of other operational income and excludes the share of profit/loss from associates and joint ventures,
as well as gains/losses on disposal of subsidiaries, associates, joint ventures and other operations. Information on revenue is provided for
continuing operations only and therefore excludes any revenue related to the Group's US insurance entity, as described in Note 1. Prior year
comparatives have been adjusted accordingly.
The tables below split the revenue by the geographic location of the client.
United
Kingdom
USA
Rest of
World
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Insurance revenue
9,056
\u2013
166
9,222
Fees from fund management and investment contracts
724
75
109
908
Other operational income from contracts with customers
331
1
\u2013
332
Total revenue
10,111
76
275
10,462
United
Kingdom
USA
Rest of
World
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Insurance revenue
8,419
\u2013
123
8,542
Fees from fund management and investment contracts
702
83
79
864
Other operational income from contracts with customers
1,249
2
\u2013
1,251
Total revenue
10,370
85
202
10,657
(c) Total revenue \u2013 internal/external analysis
Institutional
Retirement
Asset
Management1
Insurance
Retail
Retirement
Corporate
Investments\u00a0
and other 2
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Internal revenue3
\u2013
227
\u2013
\u2013
(227)
\u2013
External revenue
5,643
879
2,147
1,719
74
10,462
Total revenue
5,643
1,106
2,147
1,719
(153)
10,462
Institutional
Retirement
Asset
Management1
Insurance
Retail
Retirement
Corporate
Investments\u00a0
and other 2
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Internal revenue3
\u2013
215
\u2013
\u2013
(215)
\u2013
External revenue
5,235
849
1,984
1,584
1,005
10,657
Total revenue
5,235
1,064
1,984
1,584
790
10,657
1. Asset Management internal revenue relates to investment management services provided to other segments.
2. Other includes inter-segmental eliminations and Group consolidation adjustments.
3. Asset Management revenue includes the investment management activities that the division undertakes on behalf of other Group businesses. The revenue for the most significant
portion of these activities is included in the above table on a gross basis. Any additional services provided by Asset Management to other divisions are eliminated in the segmental
disclosures and presented on a gross basis. The comparatives for 2024, which previously showed certain of these activities on a net basis, have been re-presented accordingly.
(d) Fees from fund management and investment contracts
Fees from fund management and investment contracts include fees for administration and managing of funds in pension plans, as well
as\u00a0revenue generated from acting as the investment manager for clients. Transaction fees are charged to implement trades for clients.
Asset
Management
Retail
Retirement
Corporate
Investments\u00a0
and other 1
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Investment contracts and management fees 2
970
138
(219)
889
Transaction fees
19
\u2013
\u2013
19
Total fees from fund management and investment contracts
989
138
(219)
908
Asset
Management
Retail
Retirement
Corporate
Investments\u00a0
and other 1
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Investment contracts and management fees 2
930
122
(207)
845
Transaction fees
19
\u2013
\u2013
19
Total fees from fund management and investment contracts
949
122
(207)
864
1. Other includes inter-segmental eliminations and Group consolidation adjustments.
2. Asset Management revenue includes the investment management activities that the division undertakes on behalf of other Group businesses. The revenue for the most significant
portion of these activities is included in the above table on a gross basis. Any additional services provided by Asset Management to other divisions are eliminated in the segmental
disclosures and presented on a gross basis. The comparatives for 2024, which previously showed certain of these activities on a net basis, have been re-presented accordingly.
(e) Other operational income from contracts with customers
Other operational income from contracts with customers includes house building revenue, revenue arising from professional services and
insurance broker fees.
Institutional
Retirement
Asset
Management
Insurance
Retail
Retirement
Corporate
Investments\u00a0
and other 1
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
House building
7
104
\u2013
\u2013
61
172
Professional services fees
\u2013
13
58
6
5
82
Insurance broker
\u2013
\u2013
78
\u2013
\u2013
78
Total other operational income from contracts with customers2
7
117
136
6
66
332
Institutional
Retirement
Asset
Management
Insurance
Retail
Retirement
Corporate
Investments\u00a0
and other 1
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
House building
14
100
\u2013
\u2013
984
1,098
Professional services fees
\u2013
14
51
6
13
84
Insurance broker
\u2013
\u2013
68
\u2013
\u2013
68
Total other operational income from contracts with customers2
14
114
119
6
997
1,250
1. Other includes inter-segmental eliminations and Group consolidation adjustments.
2. Total other operational income from contracts with customers excludes the share of profit/loss from associates and joint ventures and the gain on disposal of subsidiaries, associates and
joint ventures.
5. Insurance service and other expenses
2025
20241
Notes
\u00a3m
\u00a3m
Claims and benefits
6,912
6,395
Fees and commissions
500
308
Losses and reversals of losses on onerous contracts
(415)
281
Loss on disposal of subsidiaries2
19
77
Staff costs (including pension costs and share-based payments)
33
1,171
1,174
Redundancy costs
20
15
Auditor\u2019s remuneration
32
19
17
Depreciation and impairment of plant and equipment
12
44
60
Amortisation and impairment of intangible assets
11
57
50
House building expenses 3
232
945
Other administrative expenses
908
831
Amounts attributed to insurance acquisition cash flows incurred during the year
22(ix)(a)
(231)
(229)
Amortisation of insurance acquisition expenses
22(iii)(a),22(v)(a)
121
110
Total Insurance service and other expenses
9,357
10,034
Represented by:
Insurance service expenses
7,191
7,235
Other expenses
2,166
2,799
Total Insurance service and other expenses
9,357
10,034
1. Comparative information has been re-presented to reflect the results of the US protection and US pension risk transfer (PRT) business as discontinued operations. See Note 1 for further
information.
2. 2024 loss on disposal of subsidiaries reflects the disposal of Cala.
3. House building expenses represent the cost of sales of the Group\u2019s house building businesses, including Cala in 2024. A total of \u00a3172m (2024: \u00a31,098m) of house building income has
been recognised in the year (see Note 2(v)(e)).
", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesByNatureExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-636": { "value": "
2. Supplementary adjusted operating profit information
(i) Adjusted operating profit
2025
2024
For the year ended 31 December 2025
Notes
\u00a3m
\u00a3m
Institutional Retirement1
2(ii)
1,168
1,097
Asset Management
2(iii)
402
401
Retail
2(ii)
447
430
Insurance1
119
114
Retail Retirement
328
316
Group debt costs2
(229)
(216)
Group investment projects and expenses
(165)
(178)
Core operating profit 1
1,623
1,534
Non-retained US business1
90
82
Corporate Investments
43
95
Total adjusted operating profit
1,756
1,711
Investment variance
2(iv)
(771)
(1,196)
M&A and restructuring 3
(202)
(187)
Profits attributable to non-controlling interests
24
4
Adjusted profit before tax attributable to equity holders
807
332
Tax expense attributable to equity holders
31
(191)
(137)
Profit for the year
616
195
Less: Profit after tax from discontinued operations
(96)
(65)
Total tax expense from continuing operations
304
318
Profit before tax from continuing operations
824
448
Profit attributable to equity holders
592
191
Earnings per share:
Core operating (pence per share)1,4
7
20.93
19.20
Basic (pence per share) 4
7
9.99
2.89
Diluted (pence per share) 4
7
9.74
2.86
1. Comparative amounts for Institutional Retirement and Insurance, which are components of core operating profit and core operating EPS, have been restated. Refer to Note 1 for further details.
2. Group debt costs exclude interest on non-recourse financing.
3. M&A and restructuring costs comprise one\u2011off project expenses related to mergers, acquisitions, disposals and organisational restructuring activities. In 2025, these costs include
expenses associated with the disposal of the Group\u2019s US insurance entity, as well as transformation initiatives, including costs linked to the extension of Asset Management\u2019s
partnership with State Street. In 2024, they include \u00a399m relating to the disposal of Cala.
4. These earnings per share calculations are based on profit attributable to equity holders of the Company derived from continuing and discontinued operations.
This supplementary adjusted operating profit information (one of the Group\u2019s key performance indicators) provides additional analysis of the
results reported under IFRS and the Group believes that it provides stakeholders with useful information to enhance their understanding of
the\u00a0performance of the business in the year. Core operating profit measures the operating performance of the Group\u2019s core businesses and
is\u00a0therefore calculated as the Group\u2019s adjusted operating profit excluding the adjusted operating profit of the Corporate Investments unit and
Non-retained US business.
Adjusted operating profit measures the pre-tax result excluding the impact of investment volatility, economic assumption changes caused by
changes in market conditions or expectations and exceptional items. Adjusted operating profit for insurance contracts primarily reflects the
release of profit from the contractual service margin and risk adjustment in the year (adjusted for reinsurance mismatches), the unwind of the
discount rate used in the calculation of the insurance liabilities and incurred expenses that are not directly attributable to the insurance contracts.
To remove investment volatility, adjusted operating profit reflects long-term expected investment returns on the substantial majority of
investments held by the Group, including both traded and private market investments. For the remainder of the asset portfolio, including
certain operational businesses in Asset Management and, up to its disposal on 31 October 2024, CALA Group (Holdings) Limited (Cala),
no adjustments are made to exclude investment volatility. The investment margin for insurance business therefore reflects the expected
investment return above the unwind of the insurance liability discount rate.
The long-term expected investment return reflects the best estimate of the long-term return at the start of the year, as follows:
\u2022 expected returns for traded equity, commercial property and residential property (including lifetime mortgages) are based on market
consensus forecasts and long-term historic average returns expected to apply through the cycle
\u2022 assumptions for fixed interest securities measured at FVTPL are based on asset yields for the assets held, less an adjustment for credit risk
(assessed on a best estimate basis). Where securities are measured at amortised cost or FVOCI, the expected investment return comprises
interest income on an effective interest rate basis
\u2022 equity direct investments incorporate investments in real estate, infrastructure, private credit and venture capital. Where used for the
determination of adjusted operating profit, the long-term expected investment return is on average between 10% and 12%
(2024: 10% and 12%). Rates of return specific to each asset are determined at the point of underwriting and reviewed and updated
annually. The rate of return for assets belonging to Corporate Investments is determined at a portfolio level and is updated annually if
required. The expected investment return includes current financial assumptions as well as sector specific assumptions, including retail
and commercial property yields and power prices where appropriate.
The long-term expectations used in determining the expected investment returns for traded equity and property assets are:
2025
2024
Equity returns
7%
7%
Commercial property growth
5%
5%
Residential property growth
3.5%
3.5%
Variances between actual and long-term expected investment returns are excluded from adjusted operating profit, as are economic
assumption changes to insurance contract liabilities caused by movements in market conditions or expectations (e.g. credit default and
inflation) and any difference between the actual allocated asset mix and the target long-term asset mix on new pension risk transfer
business. Assets held for future\u00a0new pension risk transfer business are excluded from the asset portfolio used to determine the discount
rate for annuities on insurance contract liabilities. The impact of investment management actions that optimise the yield of the assets
backing the back book of annuity contracts is\u00a0included within adjusted operating profit.
M&A and restructuring includes exceptional income and expenses which arise outside the normal course of business in the year, such
as disposals gains and losses, restructuring and mergers and acquisition costs.
(ii) Analysis of Institutional Retirement and Retail adjusted operating profit
Institutional
Retirement
Retail
Institutional
Retirement 5
Retail5
2025
2025
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Amortisation of the CSM in the year1
667
396
643
371
Release of risk adjustment in the year
132
79
140
77
Experience variances
(12)
\u2013
(10)
(11)
Development of losses on onerous contracts 2
\u2013
(5)
\u2013
(1)
Other expenses 3
(172)
(117)
(161)
(99)
Insurance investment margin4
548
141
479
127
Investment contracts and non-insurance operating profit
5
(47)
6
(34)
Total Institutional Retirement and Retail adjusted operating profit
1,168
447
1,097
430
1. Contractual service margin (CSM) amortisation for Retail has been reduced by \u00a316m (2024: \u00a318m) to exclude the impact of reinsurance mismatches.
2. Development of losses on onerous contracts has been adjusted by \u00a313m to remove the reversal of gross contract losses that were excluded from adjusted operating profit in previous
periods. In 2024, \u00a335m of gross contract losses were excluded from adjusted operating profit where, net of reinsurance, the contracts remained profitable to remove gross contract
losses where, net of reinsurance, the contracts remain profitable. These accounting losses will be presented as a reduction to the CSM amortisation in future periods.
3. Other expenses are non-attributable expenses on both new business and existing business. These are overhead costs which are not allowed for in the best estimate liability unit cost
assumptions and instead are reported within the Consolidated Income Statement as part of the profit or loss for the year.
4. Insurance investment margin comprises the expected investment return on assets backing insurance contract liabilities, the unwind of the discount rate on insurance contract liabilities
and the optimisation of the assets backing the annuity back book.\u00a0
5. Comparative amounts have been restated. Refer to Note 1 for further details.
(iii) Asset Management adjusted operating profit
2025
20242
\u00a3m
\u00a3m
Management fee revenue (excluding third-party market data)1,2
1,022
976
Transactional revenue 3
16
20
Expenses (excluding third-party market data) 1,2
(780)
(740)
Adjusted operating profit from fee-related earnings
258
256
Adjusted operating profit from balance sheet investments4
144
145
Total Asset Management adjusted operating profit
402
401
1. Asset Management revenue has been presented net of costs of \u00a331m (2024: \u00a330m) in relation to the provision of third-party market data.
2. Asset Management revenue and expenses include, but not limited to, investment management activities that the division undertakes on behalf of other Group businesses. Consistent
with Note 2(v), these activities are presented in the table above on a gross basis. The comparatives for 2024, which previously showed certain of these activities on a net basis, have
been re-presented accordingly.
3. Transactional revenue from external clients includes execution fees, asset transition income, trigger fees, arrangement fees on property transactions and performance fees.
4. Earnings from balance sheet investments across real estate, infrastructure, private credit and venture capital.
(iv) Investment variance
2025
2024
\u00a3m
\u00a3m
Shareholder assets
In year versus expected returns1
(240)
(224)
Asset revaluations 2
(304)
(322)
Insurance business
Economic impacts on insurance business 3
105
(362)
Modelling and assumption changes4
(285)
(214)
Reinsurance mismatches5
28
(17)
Other non-operating items
(75)
(57)
Investment variance
(771)
(1,196)
1. Represents the in year variance between actual and longer-term expected returns on shareholder assets, in particular those held in Asset Management and Corporate Investments.
2. Asset revaluations in both 2024 and 2025 include in year write-downs of a number of Private Markets assets that have been adversely impacted by wider macroeconomic trends,
particularly in real estate and growth equity sectors. \u00a3110m of these write-downs have arisen in the Corporate Investments unit, which represents assets that are no longer deemed
strategic to the Group, including a small number of assets that were transferred from Asset Management in Q4 2025, following the completion of the strategic review undertaken by
the CEO of the Asset Management business.
3. Economic impacts arising on insurance business in 2025 reflect the positive impacts of changes in interest rates and inflation, partially offset by other economics including property
returns. In 2024, annuity business was adversely impacted by increases in interest rates and inflation expectations.
4. Primarily reflects the impact of the difference between locked and current rates on assumption and modelling changes, particularly in respect of annuity liabilities. In 2025, it also
includes \u00a3(29)m arising from an action to reduce the cost of reinsurance. 2024 was impacted by a higher level of assumption changes related to longevity. Modelling and assumption
changes have increased CSM in 2025 by \u00a3290m (2024: \u00a3195m) which will be earned back in future periods.
5. Reinsurance mismatches were positive, reflecting the adjustment to reported CSM amortisation within operating profit and the reversal of past onerous contract losses.
Investment variance includes differences between actual and long-term expected investment return on traded and non-traded assets, the
impact of economic assumption changes caused by changes in market conditions or expectations (e.g. credit default and inflation), the impact
of any difference between the actual allocated asset mix and the target long-term asset mix on new pension risk transfer business and the
yield associated with assets held for future new pension risk transfer business. Note 2(i) includes details around the determination of the
long-term expected investment return in the calculation of adjusted operating profit.
Changes in non-financial assumptions, including longevity, recalibrate the CSM at locked-in, point-of-sale discount rates, whilst the
fulfilment cash flows change at the current discount rate. This creates a component of investment variance reflecting the difference
between these bases.
For the Group\u2019s long-term insurance businesses, reinsurance mismatches can arise where the reinsurance offset rules in IFRS 17 do not
reflect management\u2019s view of the net of reinsurance transaction. In particular, during a year of reinsurance renegotiation, reinsurance gains
cannot be recognised to offset any inception losses on the underlying contracts where they are recognised before the new reinsurance
agreement is signed. In these circumstances, the onerous contract losses are reduced to reflect the net loss (if any) after reinsurance and
future contractual service margin (CSM) amortisation is reduced over the duration of the contracts. Additionally, in some circumstances,
profitable reinsurance does not mitigate onerous losses on gross contracts whilst the net position remains profitable. Where this is the
case, onerous contract profits or losses are also presented below adjusted operating profit and the CSM amortisation is adjusted over the
remaining duration of the contracts.
(v) Segmental analysis
The Group has five reportable segments, comprising Institutional Retirement, Asset Management, Insurance, Retail Retirement and Corporate
Investments. As explained in Note 1, as a result of the sale of the Group\u2019s US insurance entity (completed in February 2026), the composition of the
Group\u2019s reportable segments has changed. After completion, the Group is no longer exposed to its US protection business and to 20% of its US PRT
business. Their contribution to the Group is therefore excluded from the results of the Insurance and Institutional Retirement segments respectively
and reported separately as Non-retained US business. Prior year comparatives have been restated accordingly.
Group expenses, debt costs and assets held centrally are reported separately. Transactions between segments are on normal commercial
terms and are included within the reported segments.
In the UK, annuity liabilities relating to Institutional Retirement and Retail Retirement are backed by a single portfolio of assets and once a
transaction has been completed the assets relating to any particular transaction are not tracked to the related liabilities. Investment variance
is allocated to the two business segments based on the relative size of the underlying insurance contract liabilities.
Reporting of assets and liabilities by reportable segment has not been included, as this is not information that is provided to key decision
makers on a regular basis. The Group\u2019s assets and liabilities are managed on a legal entity rather than a segment basis, in line with
regulatory requirements.
Financial information on the reportable segments is further broken down where relevant in order to better explain the drivers of the Group\u2019s results.
(a) Profit/(loss) for the year
Institutional
Retirement
Asset
Management
Insurance
Retail
Retirement
Group
expenses
and debt
costs
Total Core
Corporate
Investments
Non-
retained US
business
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Adjusted operating profit/(loss)
1,168
402
119
328
(394)
1,623
43
90
1,756
Investment variance
(250)
(236)
12
(74)
(43)
(591)
(167)
(13)
(771)
M&A and restructuring
(1)
(94)
(6)
(5)
(81)
(187)
(15)
\u2013
(202)
Profits attributable to non-controlling interests
\u2013
\u2013
\u2013
\u2013
24
24
\u2013
\u2013
24
Profit/(loss) before tax attributable to equity holders
917
72
125
249
(494)
869
(139)
77
807
Tax (expense)/credit attributable to equity holders
(192)
(24)
(31)
(49)
105
(191)
14
(14)
(191)
Profit/(loss) for the year
725
48
94
200
(389)
678
(125)
63
616
Attributable to:
Continuing operations
520
Discontinued operations 1
96
Institutional
Retirement
Asset
Management
Insurance
Retail
Retirement
Group
expenses
and debt
costs
Total Core
Corporate
Investments
Non-
retained US
business
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Adjusted operating profit/(loss)
1,097
401
114
316
(394)
1,534
95
82
1,711
Investment variance
(553)
(161)
(30)
(157)
(23)
(924)
(248)
(24)
(1,196)
M&A and restructuring
\u2013
(29)
\u2013
\u2013
(18)
(47)
(140)
\u2013
(187)
Profits attributable to non-controlling interests
\u2013
\u2013
\u2013
\u2013
4
4
\u2013
\u2013
4
Profit/(loss) before tax attributable to equity holders
544
211
84
159
(431)
567
(293)
58
332
Tax (expense)/credit attributable to equity holders
(131)
(46)
(30)
(37)
118
(126)
\u2013
(11)
(137)
Profit/(loss) for the year
413
165
54
122
(313)
441
(293)
47
195
Attributable to:
Continuing operations
130
Discontinued operations 1
65
1. Discontinued operations include the total amount of the Group\u2019s US protection and US pension risk transfer businesses. Refer to Note 1 for further details.
(b) Total revenue \u2013 summary
Total revenue includes insurance revenue, fees from fund management and investment contracts and other operational income from
contracts with customers. Further details on the components of insurance revenue are disclosed in Note 22. Other operational income from
contracts with customers is a component of other operational income and excludes the share of profit/loss from associates and joint ventures,
as well as gains/losses on disposal of subsidiaries, associates, joint ventures and other operations. Information on revenue is provided for
continuing operations only and therefore excludes any revenue related to the Group's US insurance entity, as described in Note 1. Prior year
comparatives have been adjusted accordingly.
The tables below split the revenue by the geographic location of the client.
United
Kingdom
USA
Rest of
World
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Insurance revenue
9,056
\u2013
166
9,222
Fees from fund management and investment contracts
724
75
109
908
Other operational income from contracts with customers
331
1
\u2013
332
Total revenue
10,111
76
275
10,462
United
Kingdom
USA
Rest of
World
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Insurance revenue
8,419
\u2013
123
8,542
Fees from fund management and investment contracts
702
83
79
864
Other operational income from contracts with customers
1,249
2
\u2013
1,251
Total revenue
10,370
85
202
10,657
(c) Total revenue \u2013 internal/external analysis
Institutional
Retirement
Asset
Management1
Insurance
Retail
Retirement
Corporate
Investments\u00a0
and other 2
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Internal revenue3
\u2013
227
\u2013
\u2013
(227)
\u2013
External revenue
5,643
879
2,147
1,719
74
10,462
Total revenue
5,643
1,106
2,147
1,719
(153)
10,462
Institutional
Retirement
Asset
Management1
Insurance
Retail
Retirement
Corporate
Investments\u00a0
and other 2
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Internal revenue3
\u2013
215
\u2013
\u2013
(215)
\u2013
External revenue
5,235
849
1,984
1,584
1,005
10,657
Total revenue
5,235
1,064
1,984
1,584
790
10,657
1. Asset Management internal revenue relates to investment management services provided to other segments.
2. Other includes inter-segmental eliminations and Group consolidation adjustments.
3. Asset Management revenue includes the investment management activities that the division undertakes on behalf of other Group businesses. The revenue for the most significant
portion of these activities is included in the above table on a gross basis. Any additional services provided by Asset Management to other divisions are eliminated in the segmental
disclosures and presented on a gross basis. The comparatives for 2024, which previously showed certain of these activities on a net basis, have been re-presented accordingly.
(d) Fees from fund management and investment contracts
Fees from fund management and investment contracts include fees for administration and managing of funds in pension plans, as well
as\u00a0revenue generated from acting as the investment manager for clients. Transaction fees are charged to implement trades for clients.
Asset
Management
Retail
Retirement
Corporate
Investments\u00a0
and other 1
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Investment contracts and management fees 2
970
138
(219)
889
Transaction fees
19
\u2013
\u2013
19
Total fees from fund management and investment contracts
989
138
(219)
908
Asset
Management
Retail
Retirement
Corporate
Investments\u00a0
and other 1
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Investment contracts and management fees 2
930
122
(207)
845
Transaction fees
19
\u2013
\u2013
19
Total fees from fund management and investment contracts
949
122
(207)
864
1. Other includes inter-segmental eliminations and Group consolidation adjustments.
2. Asset Management revenue includes the investment management activities that the division undertakes on behalf of other Group businesses. The revenue for the most significant
portion of these activities is included in the above table on a gross basis. Any additional services provided by Asset Management to other divisions are eliminated in the segmental
disclosures and presented on a gross basis. The comparatives for 2024, which previously showed certain of these activities on a net basis, have been re-presented accordingly.
(e) Other operational income from contracts with customers
Other operational income from contracts with customers includes house building revenue, revenue arising from professional services and
insurance broker fees.
Institutional
Retirement
Asset
Management
Insurance
Retail
Retirement
Corporate
Investments\u00a0
and other 1
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
House building
7
104
\u2013
\u2013
61
172
Professional services fees
\u2013
13
58
6
5
82
Insurance broker
\u2013
\u2013
78
\u2013
\u2013
78
Total other operational income from contracts with customers2
7
117
136
6
66
332
Institutional
Retirement
Asset
Management
Insurance
Retail
Retirement
Corporate
Investments\u00a0
and other 1
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
House building
14
100
\u2013
\u2013
984
1,098
Professional services fees
\u2013
14
51
6
13
84
Insurance broker
\u2013
\u2013
68
\u2013
\u2013
68
Total other operational income from contracts with customers2
14
114
119
6
997
1,250
1. Other includes inter-segmental eliminations and Group consolidation adjustments.
2. Total other operational income from contracts with customers excludes the share of profit/loss from associates and joint ventures and the gain on disposal of subsidiaries, associates and
joint ventures.
", "dimensions": { "concept": "ifrs-full:DisclosureOfProfitLossFromOperatingActivitiesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-639": { "value": "
(v) Segmental analysis
The Group has five reportable segments, comprising Institutional Retirement, Asset Management, Insurance, Retail Retirement and Corporate
Investments. As explained in Note 1, as a result of the sale of the Group\u2019s US insurance entity (completed in February 2026), the composition of the
Group\u2019s reportable segments has changed. After completion, the Group is no longer exposed to its US protection business and to 20% of its US PRT
business. Their contribution to the Group is therefore excluded from the results of the Insurance and Institutional Retirement segments respectively
and reported separately as Non-retained US business. Prior year comparatives have been restated accordingly.
Group expenses, debt costs and assets held centrally are reported separately. Transactions between segments are on normal commercial
terms and are included within the reported segments.
In the UK, annuity liabilities relating to Institutional Retirement and Retail Retirement are backed by a single portfolio of assets and once a
transaction has been completed the assets relating to any particular transaction are not tracked to the related liabilities. Investment variance
is allocated to the two business segments based on the relative size of the underlying insurance contract liabilities.
Reporting of assets and liabilities by reportable segment has not been included, as this is not information that is provided to key decision
makers on a regular basis. The Group\u2019s assets and liabilities are managed on a legal entity rather than a segment basis, in line with
regulatory requirements.
Financial information on the reportable segments is further broken down where relevant in order to better explain the drivers of the Group\u2019s results.
(a) Profit/(loss) for the year
Institutional
Retirement
Asset
Management
Insurance
Retail
Retirement
Group
expenses
and debt
costs
Total Core
Corporate
Investments
Non-
retained US
business
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Adjusted operating profit/(loss)
1,168
402
119
328
(394)
1,623
43
90
1,756
Investment variance
(250)
(236)
12
(74)
(43)
(591)
(167)
(13)
(771)
M&A and restructuring
(1)
(94)
(6)
(5)
(81)
(187)
(15)
\u2013
(202)
Profits attributable to non-controlling interests
\u2013
\u2013
\u2013
\u2013
24
24
\u2013
\u2013
24
Profit/(loss) before tax attributable to equity holders
917
72
125
249
(494)
869
(139)
77
807
Tax (expense)/credit attributable to equity holders
(192)
(24)
(31)
(49)
105
(191)
14
(14)
(191)
Profit/(loss) for the year
725
48
94
200
(389)
678
(125)
63
616
Attributable to:
Continuing operations
520
Discontinued operations 1
96
Institutional
Retirement
Asset
Management
Insurance
Retail
Retirement
Group
expenses
and debt
costs
Total Core
Corporate
Investments
Non-
retained US
business
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Adjusted operating profit/(loss)
1,097
401
114
316
(394)
1,534
95
82
1,711
Investment variance
(553)
(161)
(30)
(157)
(23)
(924)
(248)
(24)
(1,196)
M&A and restructuring
\u2013
(29)
\u2013
\u2013
(18)
(47)
(140)
\u2013
(187)
Profits attributable to non-controlling interests
\u2013
\u2013
\u2013
\u2013
4
4
\u2013
\u2013
4
Profit/(loss) before tax attributable to equity holders
544
211
84
159
(431)
567
(293)
58
332
Tax (expense)/credit attributable to equity holders
(131)
(46)
(30)
(37)
118
(126)
\u2013
(11)
(137)
Profit/(loss) for the year
413
165
54
122
(313)
441
(293)
47
195
Attributable to:
Continuing operations
130
Discontinued operations 1
65
1. Discontinued operations include the total amount of the Group\u2019s US protection and US pension risk transfer businesses. Refer to Note 1 for further details.
(b) Total revenue \u2013 summary
Total revenue includes insurance revenue, fees from fund management and investment contracts and other operational income from
contracts with customers. Further details on the components of insurance revenue are disclosed in Note 22. Other operational income from
contracts with customers is a component of other operational income and excludes the share of profit/loss from associates and joint ventures,
as well as gains/losses on disposal of subsidiaries, associates, joint ventures and other operations. Information on revenue is provided for
continuing operations only and therefore excludes any revenue related to the Group's US insurance entity, as described in Note 1. Prior year
comparatives have been adjusted accordingly.
The tables below split the revenue by the geographic location of the client.
United
Kingdom
USA
Rest of
World
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Insurance revenue
9,056
\u2013
166
9,222
Fees from fund management and investment contracts
724
75
109
908
Other operational income from contracts with customers
331
1
\u2013
332
Total revenue
10,111
76
275
10,462
United
Kingdom
USA
Rest of
World
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Insurance revenue
8,419
\u2013
123
8,542
Fees from fund management and investment contracts
702
83
79
864
Other operational income from contracts with customers
1,249
2
\u2013
1,251
Total revenue
10,370
85
202
10,657
(c) Total revenue \u2013 internal/external analysis
Institutional
Retirement
Asset
Management1
Insurance
Retail
Retirement
Corporate
Investments\u00a0
and other 2
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Internal revenue3
\u2013
227
\u2013
\u2013
(227)
\u2013
External revenue
5,643
879
2,147
1,719
74
10,462
Total revenue
5,643
1,106
2,147
1,719
(153)
10,462
Institutional
Retirement
Asset
Management1
Insurance
Retail
Retirement
Corporate
Investments\u00a0
and other 2
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Internal revenue3
\u2013
215
\u2013
\u2013
(215)
\u2013
External revenue
5,235
849
1,984
1,584
1,005
10,657
Total revenue
5,235
1,064
1,984
1,584
790
10,657
1. Asset Management internal revenue relates to investment management services provided to other segments.
2. Other includes inter-segmental eliminations and Group consolidation adjustments.
3. Asset Management revenue includes the investment management activities that the division undertakes on behalf of other Group businesses. The revenue for the most significant
portion of these activities is included in the above table on a gross basis. Any additional services provided by Asset Management to other divisions are eliminated in the segmental
disclosures and presented on a gross basis. The comparatives for 2024, which previously showed certain of these activities on a net basis, have been re-presented accordingly.
(d) Fees from fund management and investment contracts
Fees from fund management and investment contracts include fees for administration and managing of funds in pension plans, as well
as\u00a0revenue generated from acting as the investment manager for clients. Transaction fees are charged to implement trades for clients.
Asset
Management
Retail
Retirement
Corporate
Investments\u00a0
and other 1
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Investment contracts and management fees 2
970
138
(219)
889
Transaction fees
19
\u2013
\u2013
19
Total fees from fund management and investment contracts
989
138
(219)
908
Asset
Management
Retail
Retirement
Corporate
Investments\u00a0
and other 1
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Investment contracts and management fees 2
930
122
(207)
845
Transaction fees
19
\u2013
\u2013
19
Total fees from fund management and investment contracts
949
122
(207)
864
1. Other includes inter-segmental eliminations and Group consolidation adjustments.
2. Asset Management revenue includes the investment management activities that the division undertakes on behalf of other Group businesses. The revenue for the most significant
portion of these activities is included in the above table on a gross basis. Any additional services provided by Asset Management to other divisions are eliminated in the segmental
disclosures and presented on a gross basis. The comparatives for 2024, which previously showed certain of these activities on a net basis, have been re-presented accordingly.
(e) Other operational income from contracts with customers
Other operational income from contracts with customers includes house building revenue, revenue arising from professional services and
insurance broker fees.
Institutional
Retirement
Asset
Management
Insurance
Retail
Retirement
Corporate
Investments\u00a0
and other 1
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
House building
7
104
\u2013
\u2013
61
172
Professional services fees
\u2013
13
58
6
5
82
Insurance broker
\u2013
\u2013
78
\u2013
\u2013
78
Total other operational income from contracts with customers2
7
117
136
6
66
332
Institutional
Retirement
Asset
Management
Insurance
Retail
Retirement
Corporate
Investments\u00a0
and other 1
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
House building
14
100
\u2013
\u2013
984
1,098
Professional services fees
\u2013
14
51
6
13
84
Insurance broker
\u2013
\u2013
68
\u2013
\u2013
68
Total other operational income from contracts with customers2
14
114
119
6
997
1,250
1. Other includes inter-segmental eliminations and Group consolidation adjustments.
2. Total other operational income from contracts with customers excludes the share of profit/loss from associates and joint ventures and the gain on disposal of subsidiaries, associates and
joint ventures.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-641": { "value": "
(b) Total revenue \u2013 summary
Total revenue includes insurance revenue, fees from fund management and investment contracts and other operational income from
contracts with customers. Further details on the components of insurance revenue are disclosed in Note 22. Other operational income from
contracts with customers is a component of other operational income and excludes the share of profit/loss from associates and joint ventures,
as well as gains/losses on disposal of subsidiaries, associates, joint ventures and other operations. Information on revenue is provided for
continuing operations only and therefore excludes any revenue related to the Group's US insurance entity, as described in Note 1. Prior year
comparatives have been adjusted accordingly.
The tables below split the revenue by the geographic location of the client.
United
Kingdom
USA
Rest of
World
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Insurance revenue
9,056
\u2013
166
9,222
Fees from fund management and investment contracts
724
75
109
908
Other operational income from contracts with customers
331
1
\u2013
332
Total revenue
10,111
76
275
10,462
United
Kingdom
USA
Rest of
World
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Insurance revenue
8,419
\u2013
123
8,542
Fees from fund management and investment contracts
702
83
79
864
Other operational income from contracts with customers
1,249
2
\u2013
1,251
Total revenue
10,370
85
202
10,657
(c) Total revenue \u2013 internal/external analysis
Institutional
Retirement
Asset
Management1
Insurance
Retail
Retirement
Corporate
Investments\u00a0
and other 2
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Internal revenue3
\u2013
227
\u2013
\u2013
(227)
\u2013
External revenue
5,643
879
2,147
1,719
74
10,462
Total revenue
5,643
1,106
2,147
1,719
(153)
10,462
Institutional
Retirement
Asset
Management1
Insurance
Retail
Retirement
Corporate
Investments\u00a0
and other 2
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Internal revenue3
\u2013
215
\u2013
\u2013
(215)
\u2013
External revenue
5,235
849
1,984
1,584
1,005
10,657
Total revenue
5,235
1,064
1,984
1,584
790
10,657
1. Asset Management internal revenue relates to investment management services provided to other segments.
2. Other includes inter-segmental eliminations and Group consolidation adjustments.
3. Asset Management revenue includes the investment management activities that the division undertakes on behalf of other Group businesses. The revenue for the most significant
portion of these activities is included in the above table on a gross basis. Any additional services provided by Asset Management to other divisions are eliminated in the segmental
disclosures and presented on a gross basis. The comparatives for 2024, which previously showed certain of these activities on a net basis, have been re-presented accordingly.
(d) Fees from fund management and investment contracts
Fees from fund management and investment contracts include fees for administration and managing of funds in pension plans, as well
as\u00a0revenue generated from acting as the investment manager for clients. Transaction fees are charged to implement trades for clients.
Asset
Management
Retail
Retirement
Corporate
Investments\u00a0
and other 1
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Investment contracts and management fees 2
970
138
(219)
889
Transaction fees
19
\u2013
\u2013
19
Total fees from fund management and investment contracts
989
138
(219)
908
Asset
Management
Retail
Retirement
Corporate
Investments\u00a0
and other 1
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Investment contracts and management fees 2
930
122
(207)
845
Transaction fees
19
\u2013
\u2013
19
Total fees from fund management and investment contracts
949
122
(207)
864
1. Other includes inter-segmental eliminations and Group consolidation adjustments.
2. Asset Management revenue includes the investment management activities that the division undertakes on behalf of other Group businesses. The revenue for the most significant
portion of these activities is included in the above table on a gross basis. Any additional services provided by Asset Management to other divisions are eliminated in the segmental
disclosures and presented on a gross basis. The comparatives for 2024, which previously showed certain of these activities on a net basis, have been re-presented accordingly.
(e) Other operational income from contracts with customers
Other operational income from contracts with customers includes house building revenue, revenue arising from professional services and
insurance broker fees.
Institutional
Retirement
Asset
Management
Insurance
Retail
Retirement
Corporate
Investments\u00a0
and other 1
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
House building
7
104
\u2013
\u2013
61
172
Professional services fees
\u2013
13
58
6
5
82
Insurance broker
\u2013
\u2013
78
\u2013
\u2013
78
Total other operational income from contracts with customers2
7
117
136
6
66
332
Institutional
Retirement
Asset
Management
Insurance
Retail
Retirement
Corporate
Investments\u00a0
and other 1
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
House building
14
100
\u2013
\u2013
984
1,098
Professional services fees
\u2013
14
51
6
13
84
Insurance broker
\u2013
\u2013
68
\u2013
\u2013
68
Total other operational income from contracts with customers2
14
114
119
6
997
1,250
1. Other includes inter-segmental eliminations and Group consolidation adjustments.
2. Total other operational income from contracts with customers excludes the share of profit/loss from associates and joint ventures and the gain on disposal of subsidiaries, associates and
joint ventures.
", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueFromContractsWithCustomersExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-640": { "value": "
(b) Total revenue \u2013 summary
Total revenue includes insurance revenue, fees from fund management and investment contracts and other operational income from
contracts with customers. Further details on the components of insurance revenue are disclosed in Note 22. Other operational income from
contracts with customers is a component of other operational income and excludes the share of profit/loss from associates and joint ventures,
as well as gains/losses on disposal of subsidiaries, associates, joint ventures and other operations. Information on revenue is provided for
continuing operations only and therefore excludes any revenue related to the Group's US insurance entity, as described in Note 1. Prior year
comparatives have been adjusted accordingly.
The tables below split the revenue by the geographic location of the client.
United
Kingdom
USA
Rest of
World
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Insurance revenue
9,056
\u2013
166
9,222
Fees from fund management and investment contracts
724
75
109
908
Other operational income from contracts with customers
331
1
\u2013
332
Total revenue
10,111
76
275
10,462
United
Kingdom
USA
Rest of
World
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Insurance revenue
8,419
\u2013
123
8,542
Fees from fund management and investment contracts
702
83
79
864
Other operational income from contracts with customers
1,249
2
\u2013
1,251
Total revenue
10,370
85
202
10,657
(c) Total revenue \u2013 internal/external analysis
Institutional
Retirement
Asset
Management1
Insurance
Retail
Retirement
Corporate
Investments\u00a0
and other 2
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Internal revenue3
\u2013
227
\u2013
\u2013
(227)
\u2013
External revenue
5,643
879
2,147
1,719
74
10,462
Total revenue
5,643
1,106
2,147
1,719
(153)
10,462
Institutional
Retirement
Asset
Management1
Insurance
Retail
Retirement
Corporate
Investments\u00a0
and other 2
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Internal revenue3
\u2013
215
\u2013
\u2013
(215)
\u2013
External revenue
5,235
849
1,984
1,584
1,005
10,657
Total revenue
5,235
1,064
1,984
1,584
790
10,657
1. Asset Management internal revenue relates to investment management services provided to other segments.
2. Other includes inter-segmental eliminations and Group consolidation adjustments.
3. Asset Management revenue includes the investment management activities that the division undertakes on behalf of other Group businesses. The revenue for the most significant
portion of these activities is included in the above table on a gross basis. Any additional services provided by Asset Management to other divisions are eliminated in the segmental
disclosures and presented on a gross basis. The comparatives for 2024, which previously showed certain of these activities on a net basis, have been re-presented accordingly.
(d) Fees from fund management and investment contracts
Fees from fund management and investment contracts include fees for administration and managing of funds in pension plans, as well
as\u00a0revenue generated from acting as the investment manager for clients. Transaction fees are charged to implement trades for clients.
Asset
Management
Retail
Retirement
Corporate
Investments\u00a0
and other 1
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Investment contracts and management fees 2
970
138
(219)
889
Transaction fees
19
\u2013
\u2013
19
Total fees from fund management and investment contracts
989
138
(219)
908
Asset
Management
Retail
Retirement
Corporate
Investments\u00a0
and other 1
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Investment contracts and management fees 2
930
122
(207)
845
Transaction fees
19
\u2013
\u2013
19
Total fees from fund management and investment contracts
949
122
(207)
864
1. Other includes inter-segmental eliminations and Group consolidation adjustments.
2. Asset Management revenue includes the investment management activities that the division undertakes on behalf of other Group businesses. The revenue for the most significant
portion of these activities is included in the above table on a gross basis. Any additional services provided by Asset Management to other divisions are eliminated in the segmental
disclosures and presented on a gross basis. The comparatives for 2024, which previously showed certain of these activities on a net basis, have been re-presented accordingly.
(e) Other operational income from contracts with customers
Other operational income from contracts with customers includes house building revenue, revenue arising from professional services and
insurance broker fees.
Institutional
Retirement
Asset
Management
Insurance
Retail
Retirement
Corporate
Investments\u00a0
and other 1
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
House building
7
104
\u2013
\u2013
61
172
Professional services fees
\u2013
13
58
6
5
82
Insurance broker
\u2013
\u2013
78
\u2013
\u2013
78
Total other operational income from contracts with customers2
7
117
136
6
66
332
Institutional
Retirement
Asset
Management
Insurance
Retail
Retirement
Corporate
Investments\u00a0
and other 1
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
House building
14
100
\u2013
\u2013
984
1,098
Professional services fees
\u2013
14
51
6
13
84
Insurance broker
\u2013
\u2013
68
\u2013
\u2013
68
Total other operational income from contracts with customers2
14
114
119
6
997
1,250
1. Other includes inter-segmental eliminations and Group consolidation adjustments.
2. Total other operational income from contracts with customers excludes the share of profit/loss from associates and joint ventures and the gain on disposal of subsidiaries, associates and
joint ventures.
", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-642": { "value": "
3. Post balance sheet events
On 2 February 2026 the Group completed the disposal of its US insurance entity to Meiji Yasuda Life Insurance Company (Meiji Yasuda).
Proceeds of $2.6bn were received for the sale, which generated a profit on disposal currently estimated to be approximately \u00a31.4bn.", "dimensions": { "concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-645": { "value": "
4. Disposal group held for sale and discontinued operations
As described in Note 1, on 7 February 2025 the Group announced that it had agreed the sale of its US protection and US pension risk
transfer (PRT) businesses to Meiji Yasuda, a Japanese mutual life insurer, for $2.3bn. Following completion, which occurred on 2 February
2026 for $2.6bn (which reflects net asset transfers and the impact of business performance since 1 January 2025), Meiji Yasuda became the
owner of the Group's US protection business and now holds a 20% economic interest in its US PRT business, with the Group retaining 80%
of existing and new PRT business through a new reinsurance agreement with Meiji Yasuda.
As a result of the announcement, the Group\u2019s US protection and entire PRT businesses qualify for classification and measurement as a held
for sale disposal group and the results of the disposal group also meet the definition of discontinued operations. Refer to Note 1 for further
information. The balances classified as held for sale and as discontinued operations are presented below.
(i) Assets and liabilities of operations classified as held for sale
2025
\u00a3m
Intangible assets
75
Property, plant and equipment
35
Financial investments
10,593
Reinsurance contract assets
612
Deferred tax assets
95
Receivables and other assets
250
Cash and cash equivalents
1,240
Assets of operations classified as held for sale
12,900
Insurance contract liabilities
10,108
Reinsurance contract liabilities
140
Investment contract liabilities
110
Operational borrowings
1,557
Deferred tax liabilities
199
Payables and other financial liabilities
42
Other liabilities
206
Liabilities of operations classified as held for sale
12,362
Total net assets of the disposal group
538
(ii) Financial performance of discontinued operations
2025
2024
\u00a3m
\u00a3m
Revenue
2,117
2,032
Other income
773
361
Expenses
(2,773)
(2,299)
Profit before tax
117
94
Tax expense
(21)
(29)
Profit after tax from discontinued operations1
96
65
Other comprehensive income from discontinued operations1
(2)
83
Total comprehensive income from discontinued operations1
94
148
1. The profit after tax and other comprehensive income after tax from discontinued operations are attributable entirely to equity holders. The cumulative income recognised in other
comprehensive income in relation to the disposal group as at 31 December 2025 was \u00a3120m.
(iii) Cash flow information of discontinued operations
2025
2024
\u00a3m
\u00a3m
Net cash (outflow)/inflow (utilised in)/from operating activities
(239)
289
Net cash outflow utilised in investing activities
(10)
(12)
Net cash inflow from financing activities
252
213
", "dimensions": { "concept": "ifrs-full:DisclosureOfDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-644": { "value": "
4. Disposal group held for sale and discontinued operations
As described in Note 1, on 7 February 2025 the Group announced that it had agreed the sale of its US protection and US pension risk
transfer (PRT) businesses to Meiji Yasuda, a Japanese mutual life insurer, for $2.3bn. Following completion, which occurred on 2 February
2026 for $2.6bn (which reflects net asset transfers and the impact of business performance since 1 January 2025), Meiji Yasuda became the
owner of the Group's US protection business and now holds a 20% economic interest in its US PRT business, with the Group retaining 80%
of existing and new PRT business through a new reinsurance agreement with Meiji Yasuda.
As a result of the announcement, the Group\u2019s US protection and entire PRT businesses qualify for classification and measurement as a held
for sale disposal group and the results of the disposal group also meet the definition of discontinued operations. Refer to Note 1 for further
information. The balances classified as held for sale and as discontinued operations are presented below.
(i) Assets and liabilities of operations classified as held for sale
2025
\u00a3m
Intangible assets
75
Property, plant and equipment
35
Financial investments
10,593
Reinsurance contract assets
612
Deferred tax assets
95
Receivables and other assets
250
Cash and cash equivalents
1,240
Assets of operations classified as held for sale
12,900
Insurance contract liabilities
10,108
Reinsurance contract liabilities
140
Investment contract liabilities
110
Operational borrowings
1,557
Deferred tax liabilities
199
Payables and other financial liabilities
42
Other liabilities
206
Liabilities of operations classified as held for sale
12,362
Total net assets of the disposal group
538
(ii) Financial performance of discontinued operations
2025
2024
\u00a3m
\u00a3m
Revenue
2,117
2,032
Other income
773
361
Expenses
(2,773)
(2,299)
Profit before tax
117
94
Tax expense
(21)
(29)
Profit after tax from discontinued operations1
96
65
Other comprehensive income from discontinued operations1
(2)
83
Total comprehensive income from discontinued operations1
94
148
1. The profit after tax and other comprehensive income after tax from discontinued operations are attributable entirely to equity holders. The cumulative income recognised in other
comprehensive income in relation to the disposal group as at 31 December 2025 was \u00a3120m.
(iii) Cash flow information of discontinued operations
2025
2024
\u00a3m
\u00a3m
Net cash (outflow)/inflow (utilised in)/from operating activities
(239)
289
Net cash outflow utilised in investing activities
(10)
(12)
Net cash inflow from financing activities
252
213
", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-643": { "value": "
4. Disposal group held for sale and discontinued operations
As described in Note 1, on 7 February 2025 the Group announced that it had agreed the sale of its US protection and US pension risk
transfer (PRT) businesses to Meiji Yasuda, a Japanese mutual life insurer, for $2.3bn. Following completion, which occurred on 2 February
2026 for $2.6bn (which reflects net asset transfers and the impact of business performance since 1 January 2025), Meiji Yasuda became the
owner of the Group's US protection business and now holds a 20% economic interest in its US PRT business, with the Group retaining 80%
of existing and new PRT business through a new reinsurance agreement with Meiji Yasuda.
As a result of the announcement, the Group\u2019s US protection and entire PRT businesses qualify for classification and measurement as a held
for sale disposal group and the results of the disposal group also meet the definition of discontinued operations. Refer to Note 1 for further
information. The balances classified as held for sale and as discontinued operations are presented below.
(i) Assets and liabilities of operations classified as held for sale
2025
\u00a3m
Intangible assets
75
Property, plant and equipment
35
Financial investments
10,593
Reinsurance contract assets
612
Deferred tax assets
95
Receivables and other assets
250
Cash and cash equivalents
1,240
Assets of operations classified as held for sale
12,900
Insurance contract liabilities
10,108
Reinsurance contract liabilities
140
Investment contract liabilities
110
Operational borrowings
1,557
Deferred tax liabilities
199
Payables and other financial liabilities
42
Other liabilities
206
Liabilities of operations classified as held for sale
12,362
Total net assets of the disposal group
538
(ii) Financial performance of discontinued operations
2025
2024
\u00a3m
\u00a3m
Revenue
2,117
2,032
Other income
773
361
Expenses
(2,773)
(2,299)
Profit before tax
117
94
Tax expense
(21)
(29)
Profit after tax from discontinued operations1
96
65
Other comprehensive income from discontinued operations1
(2)
83
Total comprehensive income from discontinued operations1
94
148
1. The profit after tax and other comprehensive income after tax from discontinued operations are attributable entirely to equity holders. The cumulative income recognised in other
comprehensive income in relation to the disposal group as at 31 December 2025 was \u00a3120m.
(iii) Cash flow information of discontinued operations
2025
2024
\u00a3m
\u00a3m
Net cash (outflow)/inflow (utilised in)/from operating activities
(239)
289
Net cash outflow utilised in investing activities
(10)
(12)
Net cash inflow from financing activities
252
213
", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncurrentAssetsHeldForSaleAndDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-649": { "value": "
5. Insurance service and other expenses
2025
20241
Notes
\u00a3m
\u00a3m
Claims and benefits
6,912
6,395
Fees and commissions
500
308
Losses and reversals of losses on onerous contracts
(415)
281
Loss on disposal of subsidiaries2
19
77
Staff costs (including pension costs and share-based payments)
33
1,171
1,174
Redundancy costs
20
15
Auditor\u2019s remuneration
32
19
17
Depreciation and impairment of plant and equipment
12
44
60
Amortisation and impairment of intangible assets
11
57
50
House building expenses 3
232
945
Other administrative expenses
908
831
Amounts attributed to insurance acquisition cash flows incurred during the year
22(ix)(a)
(231)
(229)
Amortisation of insurance acquisition expenses
22(iii)(a),22(v)(a)
121
110
Total Insurance service and other expenses
9,357
10,034
Represented by:
Insurance service expenses
7,191
7,235
Other expenses
2,166
2,799
Total Insurance service and other expenses
9,357
10,034
1. Comparative information has been re-presented to reflect the results of the US protection and US pension risk transfer (PRT) business as discontinued operations. See Note 1 for further
information.
2. 2024 loss on disposal of subsidiaries reflects the disposal of Cala.
3. House building expenses represent the cost of sales of the Group\u2019s house building businesses, including Cala in 2024. A total of \u00a3172m (2024: \u00a31,098m) of house building income has
been recognised in the year (see Note 2(v)(e)).
32. Auditor\u2019s remuneration
2025
2024
\u00a3m
\u00a3m
Remuneration receivable by the Company's auditors for the audit of the consolidated and Company financial statements
2.3
2.2
Remuneration receivable by the Company's auditors and its associates for the supply of other services to the Company
and its associates, including remuneration for the audit of the financial statements of the Company's subsidiaries:
The audit of the Company's subsidiaries
14.3
13.5
Audit related assurance services - required by national or EU legislation
1.9
1.8
Audit related assurance services - other
1.5
1.2
Other assurance services
1.0
1.1
Total remuneration 1
21.0
19.8
1. Includes \u00a32.4m related to Auditor's remuneration, which has been included within Profit for the year attributable to discontinued operations (2024: \u00a32.5m).", "dimensions": { "concept": "ifrs-full:DisclosureOfAuditorsRemunerationExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-648": { "value": "
5. Insurance service and other expenses
2025
20241
Notes
\u00a3m
\u00a3m
Claims and benefits
6,912
6,395
Fees and commissions
500
308
Losses and reversals of losses on onerous contracts
(415)
281
Loss on disposal of subsidiaries2
19
77
Staff costs (including pension costs and share-based payments)
33
1,171
1,174
Redundancy costs
20
15
Auditor\u2019s remuneration
32
19
17
Depreciation and impairment of plant and equipment
12
44
60
Amortisation and impairment of intangible assets
11
57
50
House building expenses 3
232
945
Other administrative expenses
908
831
Amounts attributed to insurance acquisition cash flows incurred during the year
22(ix)(a)
(231)
(229)
Amortisation of insurance acquisition expenses
22(iii)(a),22(v)(a)
121
110
Total Insurance service and other expenses
9,357
10,034
Represented by:
Insurance service expenses
7,191
7,235
Other expenses
2,166
2,799
Total Insurance service and other expenses
9,357
10,034
1. Comparative information has been re-presented to reflect the results of the US protection and US pension risk transfer (PRT) business as discontinued operations. See Note 1 for further
information.
2. 2024 loss on disposal of subsidiaries reflects the disposal of Cala.
3. House building expenses represent the cost of sales of the Group\u2019s house building businesses, including Cala in 2024. A total of \u00a3172m (2024: \u00a31,098m) of house building income has
been recognised in the year (see Note 2(v)(e)).
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingExpenseExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-647": { "value": "
5. Insurance service and other expenses
2025
20241
Notes
\u00a3m
\u00a3m
Claims and benefits
6,912
6,395
Fees and commissions
500
308
Losses and reversals of losses on onerous contracts
(415)
281
Loss on disposal of subsidiaries2
19
77
Staff costs (including pension costs and share-based payments)
33
1,171
1,174
Redundancy costs
20
15
Auditor\u2019s remuneration
32
19
17
Depreciation and impairment of plant and equipment
12
44
60
Amortisation and impairment of intangible assets
11
57
50
House building expenses 3
232
945
Other administrative expenses
908
831
Amounts attributed to insurance acquisition cash flows incurred during the year
22(ix)(a)
(231)
(229)
Amortisation of insurance acquisition expenses
22(iii)(a),22(v)(a)
121
110
Total Insurance service and other expenses
9,357
10,034
Represented by:
Insurance service expenses
7,191
7,235
Other expenses
2,166
2,799
Total Insurance service and other expenses
9,357
10,034
1. Comparative information has been re-presented to reflect the results of the US protection and US pension risk transfer (PRT) business as discontinued operations. See Note 1 for further
information.
2. 2024 loss on disposal of subsidiaries reflects the disposal of Cala.
3. House building expenses represent the cost of sales of the Group\u2019s house building businesses, including Cala in 2024. A total of \u00a3172m (2024: \u00a31,098m) of house building income has
been recognised in the year (see Note 2(v)(e)).
11. Intangible assets
Intangible assets mainly consist of capitalised software costs and intangible assets acquired as part of a business combination
(customer relationships and brand). Amortisation charges and any impairments are recognised in the Consolidated Income
Statement in Other expenses (see Note 5).
Capitalised
software costs 1
Other intangible
assets
Total
2025
2025
2025
\u00a3m
\u00a3m
\u00a3m
Cost
As at 1 January
642
\u2013
642
Transfer to held for sale
(82)
\u2013
(82)
Additions
19
\u2013
19
Disposals
(9)
\u2013
(9)
Decrease due to currency translation
(1)
\u2013
(1)
As at 31 December
569
\u2013
569
Accumulated amortisation and impairment
As at 1 January
(192)
\u2013
(192)
Transfer to held for sale
12
\u2013
12
Amortisation for the year
(55)
\u2013
(55)
Impairment
(2)
\u2013
(2)
Disposals
9
\u2013
9
As at 31 December
(228)
\u2013
(228)
Total net book value as at 31 December
341
\u2013
341
To be amortised within 12 months
50
To be amortised after 12 months
291
Capitalised
software costs 1
Other intangible
assets
Total
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
Cost
As at 1 January
593
36
629
Additions
53
\u2013
53
Disposals
(6)
(25)
(31)
Increase due to currency translation
2
\u2013
2
Other movements 2
\u2013
(11)
(11)
As at 31 December
642
\u2013
642
Accumulated amortisation and impairment
As at 1 January
(142)
(10)
(152)
Amortisation for the year
(56)
\u2013
(56)
Impairment
\u2013
\u2013
\u2013
Disposals
6
\u2013
6
Other movements 2
\u2013
10
10
As at 31 December
(192)
\u2013
(192)
Total net book value as at 31 December
450
\u2013
450
To be amortised within 12 months
47
To be amortised after 12 months
403
1. Total capitalised software costs include \u00a343m of work in progress assets that were not yet available for use as at 31 December 2025 (31 December 2024: \u00a3213m).
2. Other movements primarily reflect the removal of fully amortised assets that are no longer in use.
12. Property, plant and equipment
Right-of-use
Owned
Office buildings
IT
Other1
Other2
Total
2025
2025
2025
2025
2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Cost/Valuation
As at 1 January
205
35
7
403
650
Transfer to held for sale
(51)
\u2013
\u2013
(12)
(63)
Additions
3
\u2013
\u2013
19
22
Disposals
(30)
\u2013
(2)
(18)
(50)
Decrease due to currency translation
(1)
\u2013
\u2013
(1)
(2)
Other
1
\u2013
\u2013
\u2013
1
As at 31 December
127
35
5
391
558
Accumulated depreciation and impairment
As at 1 January
(120)
(11)
(4)
(120)
(255)
Transfer to held for sale
15
\u2013
\u2013
9
24
Depreciation for the year
(13)
(8)
\u2013
(23)
(44)
Impairment
\u2013
\u2013
\u2013
\u2013
\u2013
Disposals
30
\u2013
1
17
48
Decrease due to currency translation
\u2013
\u2013
\u2013
1
1
As at 31 December
(88)
(19)
(3)
(116)
(226)
Total net book value as at 31 December
39
16
2
275
332
Right-of-use
Owned
Office buildings
IT
Other1
Other2
Total
2024
2024
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Cost/Valuation
As at 1 January
215
35
9
422
681
Additions
11
\u2013
\u2013
31
42
Disposals
(23)
\u2013
(2)
(51)
(76)
Increase due to currency translation
1
\u2013
\u2013
\u2013
1
Other
1
\u2013
\u2013
1
2
As at 31 December
205
35
7
403
650
Accumulated depreciation and impairment
As at 1 January
(115)
(5)
(4)
(124)
(248)
Depreciation for the year
(18)
(6)
(2)
(23)
(49)
Impairment
\u2013
\u2013
\u2013
(14)
(14)
Disposals
13
\u2013
2
41
56
As at 31 December
(120)
(11)
(4)
(120)
(255)
Total net book value as at 31 December
85
24
3
283
395
1. Other right-of-use assets comprise land leases and vehicles.
2. Other owned assets predominantly include land, buildings and IT, as well as owner-occupied property with a carrying value of \u00a348m as at 31 December 2025 ( 2024: \u00a347m) held\u00a0under
the fair value model.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDepreciationAndAmortisationExpenseExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-646": { "value": "
5. Insurance service and other expenses
2025
20241
Notes
\u00a3m
\u00a3m
Claims and benefits
6,912
6,395
Fees and commissions
500
308
Losses and reversals of losses on onerous contracts
(415)
281
Loss on disposal of subsidiaries2
19
77
Staff costs (including pension costs and share-based payments)
33
1,171
1,174
Redundancy costs
20
15
Auditor\u2019s remuneration
32
19
17
Depreciation and impairment of plant and equipment
12
44
60
Amortisation and impairment of intangible assets
11
57
50
House building expenses 3
232
945
Other administrative expenses
908
831
Amounts attributed to insurance acquisition cash flows incurred during the year
22(ix)(a)
(231)
(229)
Amortisation of insurance acquisition expenses
22(iii)(a),22(v)(a)
121
110
Total Insurance service and other expenses
9,357
10,034
Represented by:
Insurance service expenses
7,191
7,235
Other expenses
2,166
2,799
Total Insurance service and other expenses
9,357
10,034
1. Comparative information has been re-presented to reflect the results of the US protection and US pension risk transfer (PRT) business as discontinued operations. See Note 1 for further
information.
2. 2024 loss on disposal of subsidiaries reflects the disposal of Cala.
3. House building expenses represent the cost of sales of the Group\u2019s house building businesses, including Cala in 2024. A total of \u00a3172m (2024: \u00a31,098m) of house building income has
been recognised in the year (see Note 2(v)(e)).
", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralAndAdministrativeExpenseExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-650": { "value": "
6. Dividends
Dividend
Per share1
Dividend
Per share1
2025
2025
2024
2024
\u00a3m
p
\u00a3m
p
Ordinary dividends paid and charged to equity in the year:
Final 2023 dividend paid in June 2024
\u2013
\u2013
874
14.63
Interim 2024 dividend paid in September 2024
\u2013
\u2013
356
6.00
Final 2024 dividend paid in June 2025
898
15.36
\u2013
\u2013
Interim 2025 dividend paid in September 2025
349
6.12
\u2013
\u2013
Total dividends 2
1,247
21.48
1,230
20.63
1. The dividend per share calculation is based on the number of equity shares registered on the ex-dividend date.
2. All dividends proposed are based on the number of eligible equity shares for that date.
Subsequent to 31 December 2025, the directors declared a final dividend for 2025 of 15.67 pence per ordinary share. This dividend will
be paid on 4 June 2026. It will be accounted for as an appropriation of retained earnings in the year ended 31 December 2026 and is not
included as a liability in the Consolidated Balance Sheet as at 31 December 2025.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDividendsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-651": { "value": "0.2148", "decimals": 4, "dimensions": { "concept": "ifrs-full:DividendsRecognisedAsDistributionsToOwnersPerShare", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00", "unit": "iso4217:GBP/xbrli:shares" } }, "f-652": { "value": "0.2063", "decimals": 4, "dimensions": { "concept": "ifrs-full:DividendsRecognisedAsDistributionsToOwnersPerShare", "entity": "scheme:213800JH9QQWHLO99821", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00", "unit": "iso4217:GBP/xbrli:shares" } }, "f-653": { "value": "0.1567", "decimals": 4, "dimensions": { "concept": "ifrs-full:DividendsProposedOrDeclaredBeforeFinancialStatementsAuthorisedForIssueButNotRecognisedAsDistributionToOwnersPerShare", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00", "unit": "iso4217:GBP/xbrli:shares" } }, "f-654": { "value": "
7. Earnings per share
(i) Basic and core operating earnings per share
Total
Per share1
Total2
Per share1,2
2025
2025
2024
2024
\u00a3m
p
\u00a3m
p
Profit for the year attributable to equity holders
592
10.36
191
3.24
Less: coupon payable in respect of restricted Tier 1 convertible notes after tax relief
(21)
(0.37)
(21)
(0.35)
Total basic earnings
571
9.99
170
2.89
Less: earnings derived from discontinued operations after tax
(96)
(1.68)
(65)
(1.11)
Total basic earnings derived from continuing operations
475
8.31
105
1.78
Less: Corporate Investments adjusted operating profit after allocated tax
(32)
(0.56)
(71)
(1.20)
Less: Non-retained US business adjusted operating profit after allocated tax
(68)
(1.19)
(62)
(1.06)
Less: Investment variance after allocated tax
821
14.37
1,158
19.68
Total basic core operating earnings3
1,196
20.93
1,130
19.20
1. Basic earnings per share is calculated by dividing profit after tax by the weighted average number of ordinary shares in issue during the year, excluding employee scheme
treasury\u00a0shares.
2. Comparative amounts have been restated (refer to Note 1 for further details).
3. Total basic core operating earnings includes allocated tax at the standard UK corporate tax rate.
(ii) Diluted and core operating earnings per share
After tax
Weighted average
number of shares
Per share1
For the year ended 31 December 2025
\u00a3m
m
p
Profit for the year attributable to equity holders
592
5,713
10.36
Net shares under options allocable for no further consideration
\u2013
56
(0.10)
Conversion of restricted Tier 1 notes
\u2013
307
(0.52)
Total diluted earnings
592
6,076
9.74
Less: diluted earnings derived from discontinued operations after tax
(96)
\u2013
(1.58)
Total diluted earnings derived from continuing operations
496
6,076
8.16
Less: Corporate Investments adjusted operating profit after allocated tax
(32)
\u2013
(0.52)
Less: Non-retained US business adjusted operating profit after allocated tax
(68)
\u2013
(1.12)
Less: Investment variance after allocated tax
821
\u2013
13.51
Total diluted core operating earnings4
1,217
6,076
20.03
After tax2
Weighted average
number of shares
Per share1,2
For the year ended 31 December 2024
\u00a3m
m
p
Profit for the year attributable to equity holders
191
5,886
3.24
Less: coupon payable in respect of restricted Tier 1 convertible notes net of tax relief
(21)
\u2013
(0.35)
Net shares under options allocable for no further consideration
\u2013
62
(0.03)
Total diluted earnings
170
5,948
2.86
Less: diluted earnings derived from discontinued operations after tax
(65)
\u2013
(1.09)
Total diluted earnings derived from continuing operations
105
5,948
1.77
Less: Corporate Investments adjusted operating profit after allocated tax
(71)
\u2013
(1.20)
Less: Non-retained US business adjusted operating profit after allocated tax
(62)
\u2013
(1.04)
Less: Investment variance after allocated tax
1,158
\u2013
19.47
Conversion of restricted Tier 1 notes3
21
307
(0.60)
Total diluted core operating earnings4
1,151
6,255
18.40
1. For diluted earnings per share, the weighted average number of ordinary shares in issue, excluding employee scheme treasury shares, is adjusted to assume conversion of all potential
ordinary shares, such as share options granted to employees and conversion of restricted Tier 1 notes.
2. Comparative amounts have been restated (refer to Note 1 for further details).
3. The conversion of restricted Tier 1 notes in 2024 was antidilutive for the calculation of diluted earnings per share and dilutive for the calculation of diluted core operating earnings
per\u00a0share. Where antidilutive, the conversion has not been considered for the determination of the relevant amount per share. The instrument could potentially dilute basic earnings
per share in the future.
4. Total diluted core operating earnings includes allocated tax at the standard UK corporate tax rate.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-655": { "value": "
8. Principal products
Product classification
The Group\u2019s products are classified for accounting purposes as either insurance or investment contracts. The basis of accounting for these
products is outlined in Note 1. The following table summarises the classification of the Group\u2019s key insurance and investment contracts as
well as\u00a0investment products for each applicable business.
Reportable segment
Insurance contracts
Investment contracts and investment products
Institutional Retirement
\u2022 Pension risk transfers
\u2022 Longevity insurance
\u2022 Assured payment policies
Retail
\u2022 UK Retail protection
\u2022 UK Group protection
\u2022 US protection
\u2022 US universal life
\u2022 Individual annuities
\u2022 Lifetime Care Plan
\u2022 Lifetime mortgages
\u2022 Fixed term individual annuities
\u2022 Retirement interest only mortgages
\u2022 Workplace and Retail savings
Asset Management
\u2022 Institutional pension
\u2022 Segregated investment management mandates
\u2022 Collective investment schemes
A significant part of the Group\u2019s business involves the acceptance and management of risk.
A description of the principal products offered by the Group\u2019s core segments is outlined below. In addition to the core segments, Corporate
Investments, which represents a portfolio of non-strategic assets, is managed separately with the goal of maximising shareholder value
ahead of\u00a0potential divestment. As explained in Note 1, as a result of the planned sale of the Group\u2019s US insurance entity (completed in
February 2026), the composition of the Group\u2019s reportable segments has changed. After completion, the Group is no longer exposed to its
US protection or US universal life business and retains an 80% economic interest in the US PRT business through a new reinsurance
agreement.
The Group seeks to manage its exposure to risk through controls which ensure that the residual exposures are within acceptable tolerances
agreed by the Board. The Group\u2019s risk appetite framework and the methods used to monitor risk exposures can be found on pages 38 to 46.
Details of the risks associated with the Group\u2019s principal products and the controls used to manage these risks can be found in Notes 9
and\u00a017\u00a0to 19.
Institutional Retirement
Annuity contracts
Pension Risk Transfer (PRT) represents bulk annuities, whereby the Group accepts the assets and liabilities of a company pension scheme
or\u00a0a life fund. Annuities provide guaranteed income for a specified time, usually the life of the policyholder and may include a guaranteed
payment period. PRT business consists of both immediate and deferred annuities.
Immediate annuities provide a regular income stream to the policyholder and are in payment at the date of the transaction.
Deferred annuities provide a regular income stream to the policyholder where the income stream starts at a future date after the transaction.
Some deferred contracts accepted by the Group contain guaranteed cash options, predominantly minimum factors for commuting part
of\u00a0the\u00a0annuity income into cash at the date of vesting.
There is a block of immediate and deferred annuities within the UK business with benefits linked to changes in the RPI or for a minority
the\u00a0CPI,\u00a0but with contractual maximum or minimum increases. The impact on profit due to changes in inflation can be found in Note 21
IFRS\u00a0sensitivity analysis.
Investment contracts
The Group writes Assured Payment Policies (APP). An APP is a long-term contract under which the policyholder (a registered UK pension
scheme) pays a day-one premium and in return receives a contractually fixed and/or inflation-linked set of payments over a fixed period of
time from the insurer.
Longevity insurance contracts
The Group also provides longevity insurance products for company pension schemes, under which regular payments are made to the scheme
reflecting their actual longevity experience, while the scheme makes an agreed set of regular payments in return. Some policies contain a
guaranteed surrender value which is currently immaterial.
Asset Management
Asset Management offers both active and passive management on either a pooled or segregated basis to clients domiciled globally.
Assets\u00a0are managed on behalf of pension funds, institutional clients, sovereign wealth clients, retail clients and subsidiary companies
within\u00a0the Group.
The key products provided by Asset Management are unit linked institutional pensions, segregated investment management mandates
and\u00a0collective investment schemes.
The core strategies applied for managing the products are set out below.
Public Markets strategies
Index fund management
Asset Management provides a diversified range of pooled index funds, providing a wide choice and the ability to pursue specific benchmarks
efficiently. In addition, segregated solutions are offered to institutional clients providing large scale customisation against established market
capitalisation weighted and alternative indices.
The Asset Management Exchange Traded Fund (ETF) business provides clients access to Asset Management\u2019s index fund management
capabilities via our ETF platform. ETF products cover a broad range of traditional and thematic asset classes.
Active strategies
Asset Management offers a range of pooled and segregated active fixed income funds. The Asset Management liquidity funds offer institutional
investors a solution for their cash management requirements across a range of core currencies. The liquidity funds aim to deliver competitive
returns with a high level of diversification, whilst focusing on capital preservation through portfolios of high quality, liquid assets.
Active strategies also include an active equity management business comprising focused teams managing stock selection across
different\u00a0regions.
Solutions and Liability Driven Investment (LDI)
Asset Management provides a range of pooled and bespoke solutions to help de-risk defined benefit pension schemes. These solutions will
usually combine active or passive underlying portfolios with derivative overlays designed to meet clients\u2019 specific requirements. An allocation
strategy service is also offered to institutional clients, which may also allocate some of the portfolio to managers other than Asset Management.
Multi-asset funds
Multi-asset funds for retail and institutional clients, built using Asset Management\u2019s expertise in asset allocation which is informed by
an\u00a0in-house research capability. The underlying asset classes may be managed on an active or passive basis within Asset Management.
Private Markets strategies
Private Markets offers a range of pooled funds, segregated accounts and joint ventures investing on behalf of UK and overseas investors
across physical real estate, private corporate debt, infrastructure debt and real estate loans. The business has specialist teams of fund
and\u00a0asset managers and an in-house research team.
Direct investments are typically illiquid investments entered into through acquisition, joint venture with strategic partners or by the creation
of\u00a0new companies. Asset Management seeks to make direct investments in sectors where there are structural funding shortfalls and is
organised into four sectors: real estate, infrastructure, private credit and venture capital. We deploy capital and sector expertise to such
investments to target attractive risk-adjusted returns which can deliver higher returns and/or lower volatility for our shareholder capital
than listed equity.
Retail
The Retail division comprises Insurance and Retail Retirement businesses.
UK protection business (Retail and Group)
The Group offers protection products which provide mortality or morbidity benefits. They may include health, disability, critical illness and
accident benefits; these additional benefits are commonly provided as supplements to main life policies but can also be sold separately.
The\u00a0benefit amounts would usually be specified in the policy terms. Some sickness benefits cover the policyholder\u2019s mortgage repayments
and\u00a0are linked to the prevailing mortgage interest rates. In addition to these benefits, some contracts may guarantee premium rates, provide
guaranteed insurability benefits and offer policyholders conversion options.
US protection business \u2013 now sold
US protection represents individual term assurance, which provides death benefits over the medium to long-term. The contracts have level
premiums for an initial period with premiums set annually thereafter. During the initial period, there is generally an option to convert the
contract to\u00a0a universal life contract. After the initial period, the premium rates are not guaranteed, but cannot exceed the age-related
guaranteed premium.
US universal life \u2013 now sold
Universal life contracts written by Legal & General America (LGA) provide savings and death benefits over the medium to long-term.
The\u00a0savings element has a guaranteed minimum growth rate. LGA has exposure to loss in the event that interest rates decrease and it
is\u00a0unable to earn enough on\u00a0the underlying assets to cover the guaranteed rate. LGA is also exposed to loss should interest rates increase,
as\u00a0the underlying market value of\u00a0assets will generally fall without a change in the surrender value.
Reinsurance is used within the protection businesses to manage exposure to large claims for individual term business and virtually all universal
life business. These practices lead to the establishment of reinsurance assets on the Group\u2019s balance sheet. Within our US business, reinsurance
and securitisation are also used to provide regulatory solvency relief (including relief from regulation governing term insurance).
Annuities
Immediate annuities have similar characteristics as products sold by Institutional Retirement. The Group also offers products for individuals
that provide a guaranteed level of income over a chosen fixed period of time, in exchange for an initial lump sum payment from the
policyholder. The products can provide a fixed lump sum at maturity and/or options to surrender on non-guaranteed terms.
Deferred annuity contracts written by LGA contain a provision that, at maturity, a policyholder may move the account value into an
immediate annuity, at rates which are either those currently in effect, or rates guaranteed in the contract.
Lifetime Care Plan
The Lifetime Care Plan provides a monthly payment to a UK registered care provider that helps meet the cost of care for the policyholder\u2019s
life. A\u00a0policyholder can choose to receive a fixed monthly payment or opt to have escalation built in. A death benefit exists within the product
so that if\u00a0a policyholder dies within the first 6 months of the start date a percentage of the original premium less any payments already made
is payable to\u00a0the estate.
Lifetime mortgages
Lifetime mortgages are a form of equity release mortgage that provide non-commercial borrowers with a loan secured against their main
residence, without the need for regular repayments. They are regulated retail mortgages offered only to borrowers over the age of 55
through specialist intermediaries. Interest accrues over the term of the loan and is repayable at the time the principal becomes due. Loans
can be advanced in a single lump sum amount or in several subsequent drawdowns of an agreed facility. All lifetime mortgages provide
a \u2018no negative equity\u2019 guarantee, which means that if the loan is repaid from the sale of the property and if the net sale proceeds are lower
than the balance of the loan, the Group will accept the net sale proceeds as full settlement.
Retirement Interest-Only mortgages
A Retirement Interest-Only (RIO) mortgage is a standard residential mortgage available for non-commercial borrowers above 55 years old.
A\u00a0RIO mortgage is very similar to a standard interest-only mortgage, with two key differences:
\u2022 the loan is usually only paid off on death, move into long-term care or sale of the house
\u2022 the borrowers only have to prove they can afford the monthly interest repayments and not the capital remaining at the end of the
mortgage term.
No repayment solution is required as repayment defaults to sale of property.
Workplace and Retail savings
Workplace savings provides corporate pension scheme solutions to enable companies to meet their auto-enrolment obligations. Workplace
savings acts as scheme operator and administrator for these products while the customers hold the individual or scheme level pension
policies issued by Legal and General Assurance Society Limited (LGAS). Our workplace proposition is complemented by Retail savings which
provides digital savings products direct to individuals in the form of a Personal Pension or a Stocks and Shares ISA. The Personal Pension
allows individuals to\u00a0save for retirement, particularly those without access to a workplace scheme, like the self-employed. Contributions
include basic rate tax relief and are invested in investment funds. Once the individual reaches the normal minimum pension age, they can
access their funds flexibly. The Stocks and Shares ISA offers individuals a tax efficient product to save into investment funds.", "dimensions": { "concept": "legalandgeneral:DisclosureOfPrincipalProducts", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-656": { "value": "
9. Asset risk
The Group is exposed to the following categories of asset risk as a consequence of offering the principal products outlined in Note 8 for the
Group\u2019s core segments along with the portfolio of non-strategic assets in the Corporate Investments unit.
Market risk
Exposure to loss as a direct or indirect result of fluctuations in the value of, or income from, specific assets.
Credit risk
Exposure to loss if another party fails to perform its financial obligations to the Group or suffers a rating downgrade.
Liquidity risk
The risk that the Group, though solvent, either does not have sufficient liquid financial resources available to enable it to meet its obligations
as they fall due, or can secure them only at excessive cost.
The Group is also exposed to insurance risk as a consequence of offering these products \u2013 more detail on insurance risk can be found
in\u00a0Note\u00a019.
The Group is not directly exposed to any market risk, credit risk or liquidity risk associated with Asset Management\u2019s client funds and as
a\u00a0result, the detailed risk disclosures have not been presented. However, Asset Management\u2019s income from client funds is related to the
value\u00a0of funds under management and so they are indirectly exposed to market risks that impact the value of assets underlying those funds.
The Group seeks to manage its exposures to risk through controls which ensure that the residual risk exposures are within acceptable
tolerances agreed by the Board. A description of the risks associated with the Group\u2019s principal products and the associated controls is
detailed in the table below.
Market risks
Principal risks
Segment
Controls to mitigate risks
Investment performance risk
The Group is exposed to the risk that the income from
and\u00a0value of, assets held to back insurance liabilities and
capital requirements do not perform in line with
investment and product pricing assumptions leading to a
potential financial loss.
Asset Management,
Institutional Retirement
and Retail
Models are used to assess the impact of a range of future return scenarios
on\u00a0investment values and associated liabilities in order to determine
optimum portfolios of invested assets. In addition, risk is managed through
maintaining a diversified range of investments. For annuities, which are
sensitive to interest rate and inflation risk, analysis of the liabilities is
undertaken to create a portfolio of\u00a0securities, the value of which changes
in line with the value of liabilities when\u00a0interest rates change.
For unit linked contracts, there is a risk of volatility in
asset management fee income due to the impact of
interest rate and market price movements on the fair
value of the assets held in the linked funds, on which
investment management fees are based. There is also
the risk of expense over-runs should the market depress
the level of charges which could be imposed.
Asset Management
and\u00a0Retail
The risk is managed through maintaining a diversified range of funds in
which\u00a0customers may invest. The performance of linked investment funds
relative to their investment objectives is subject to regular monitoring.
Periodic\u00a0assessment is also made of the long-term profitability to the
Group of\u00a0these funds. For some contracts the Group\u00a0has discretion over
the level of\u00a0management charges levied.
Property risk
Lifetime mortgages include a no negative equity
guarantee which transfers a potential loss exposure to
the Group as\u00a0a\u00a0result of low house price inflation and an
exposure to\u00a0specific properties which may experience
lower house price inflation for whatever reason.
Institutional Retirement
and Retail
To mitigate the risk, maximum loan to value ratios are set for all lending
with further underwriting criteria setting out acceptable properties for
lending purposes. Policy terms also require properties to be fully insured
and maintained, including the right of inspection. The diversification of
lending by\u00a0property type and geographic region seeks to control
exposures to specific\u00a0aspects in the property market.
The Group builds homes across the\u00a0residential market,
invest in large commercial and residential development
projects and along with Institutional Retirement manage
several developed real estate assets. The Group is
exposed to the risk that the income from and the value
of, property assets held to back insurance liabilities and
capital requirements do not perform in line with
investment and product pricing assumptions leading
to\u00a0a\u00a0potential financial loss. Valuations of real estate
assets depend both on property-specific and wider
market drivers. Properties under development can be
exposed to additional risks which impact investment
performance, including significant increases in the cost of
materials or disruption to\u00a0supply chains.
Asset Management,
Corporate Investments
and Institutional
Retirement
Diversification by geographic region and property type avoids
concentration of\u00a0exposures to specific areas of the property market.
Commercial property exposure in the Institutional Retirement annuity
portfolio is relatively limited and\u00a0is predominantly underpinned by long-
term leases with investment grade tenants. Property development activity
is relatively limited and where appropriate, key methods are adopted to
manage development risk, such\u00a0as\u00a0fixed price construction contracts,
forward sales, diversification of\u00a0contracting counterparties and pre-
leasing.
Currency risk
To diversify credit risk within the annuities business
corporate bond portfolio, investments are held in
corporate\u00a0bonds denominated in non-sterling currencies.
Asset Management also invest in overseas assets.
Fluctuations in the value of, or income from, these assets
relative to liabilities denominated in sterling could result
in\u00a0unforeseen foreign exchange losses.
Asset Management,
Institutional Retirement
and Retail
To mitigate the risk of loss from currency fluctuations, currency swaps\u00a0and
forwards are used to hedge exposures to corporate bonds denominated in
currencies other than sterling. Hedging arrangements are placed with
strongly rated counterparties with collateral requirements being subject to
regular review and reconciliation with the counterparties. The hedges do
not eliminate all currency risk and the Group retains some residual risk.
The consolidated international subsidiaries and financial
instruments of subsidiaries are translated into sterling in
the consolidated accounts. Changes in the sterling value
can impact\u00a0consolidated equity but may be mitigated by
associated hedging transactions.
Group
To mitigate the risk of loss from currency translation the Group
continuously monitors its exposure and executes appropriate hedging
transactions when necessary. Hedging arrangements are placed with
strongly rated counterparties with collateral requirements being subject to
regular review and reconciliation with the counterparties.
From time to time, the Group may opt to raise capital in
overseas debt markets when the associated borrowing
costs are more favourable than those available
domestically. Such arrangements expose the Group to
foreign exchange risk, as movements in exchange rates
create uncertainty regarding the ultimate repayment
amount.
Group
To mitigate the risk of loss from currency fluctuations the Group
continuously monitors its exposure and executes appropriate hedging
transactions when necessary. Hedging arrangements are placed with
strongly rated counterparties with collateral requirements being subject to
regular review and reconciliation with the counterparties.
Inflation risk
Inflation risk is the potential of realising a loss because
of\u00a0relative or absolute changes in inflation rates.
Annuity\u00a0contracts may provide for future benefits to be
paid\u00a0taking account of changes in the level of inflation.
Annuity contracts in payment may include an annual
adjustment for movements in price indices.
Institutional Retirement
and Retail
The investment strategy for the annuities business takes explicit account
of\u00a0the\u00a0effect of movements in price indices on contracted liabilities.
Significant\u00a0exposures that may adversely impact profitability are hedged
using\u00a0inflation swaps. Annuity contracts also typically include caps and
floors\u00a0on the annual increase in inflation-linked benefit payments. The
hedges do not eliminate all inflation risk and the Group retains some
residual risk.
Interest rate risk
Interest rate risk is the risk that the Group is exposed
to\u00a0lower returns or loss as a direct or indirect result
of\u00a0fluctuations in the value of, or income from, specific
assets and liabilities arising from changes in underlying
interest rates.
Group, Institutional
Retirement and Retail
To mitigate the risk that guarantees and commitments are not met,
financial instruments are purchased, which broadly match the nature and
terms of the expected policy benefits payable. The composition of the
investment portfolio is governed by the nature of the insurance or savings
liabilities, the expected rate of return applicable on each class of asset and
the capital available to meet the price fluctuations of each asset class,
relative to the liabilities they support.
Credit risk
Principal risks
Segment
Controls to mitigate risks
Bond default and rating downgrade risk
A significant portfolio of corporate bonds and
commercial loans are held to back the liabilities arising
from writing insurance and annuities business. Whilst
the portfolio is diversified, the asset class is inherently
exposed to the risk of issuer default and rating
downgrade, with the possibility of financial loss.
Institutional Retirement
and Retail
Portfolio level and specific issuer limits are set by financial strength rating,
sector and geographic region to limit exposure to a default event. Issuer
limits are regularly reviewed to take account of changes in market
conditions, sector performance and the re-assessment of financial
strength by rating agencies and the Group\u2019s own internal analysis.
Exposures are monitored relative to limits. Financial instruments are also
used to mitigate the impact of rating downgrades and defaults. If
appropriate, actions are taken to trade out investments at risk of default.
Reinsurance counterparty risk
Exposure to insurance risk is mitigated by ceding part of
the\u00a0risks assumed to the reinsurance market. Default of
a\u00a0reinsurer would require the business to be re-brokered
potentially on less advantageous terms, or for the risks
to\u00a0be borne directly resulting in possible financial loss.
The\u00a0Group is required to carry an element of associated
credit risk capital on its balance sheet should the
business not be re-brokered on the same terms.
Institutional Retirement
and Retail
When selecting new reinsurance partners for its business, the Group
considers only companies which have a minimum credit rating equivalent
to AA- unless there is a legally binding parental guarantee from a higher
rated entity. For each reinsurer, exposure limits are determined based on
credit ratings and projected exposure over the term of the treaty. Actual
exposures are regularly monitored relative to these limits. Similarly, for
longevity and credit risk syndication transactions, the\u00a0Group targets the
use of strongly rated counterparties and seeks to\u00a0ensure that positions are
fully collateralised. The adequacy and quality\u00a0of\u00a0collateral is subject to
ongoing monitoring.
Property lending counterparty risk
As part of our asset diversification strategy, we hold
property lending and sale and leaseback investments.
We\u00a0are inherently exposed to the risk of default by a
borrower or tenant.
Institutional Retirement
and Retail
Each property lending and sale and leaseback investment transaction is
subject to a due diligence process to assess the credit risks implicit in the
transaction and confirm that any risk of default has been appropriately
mitigated. We also protect our interests by taking security over the
underlying property associated with each investment transaction.
Banking counterparty risk
The Group is exposed to potential financial loss should
banks or the issuers of financial instruments default
on\u00a0their obligations to us. We are also exposed
to\u00a0counterparty risks in respect of the providers
of\u00a0settlement\u00a0and custody services.
Group, Asset
Management,
Institutional Retirement
and Retail
The Group controls its exposures to banking counterparties and the
issuers of\u00a0financial instruments using a framework of counterparty limits.
These limits take account of the relative financial strength of the
counterparty as well as other bank counterparty exposures that the
Group\u00a0may have. Limits are subject to regular review with actual
exposures monitored against limits. The Group has\u00a0defined criteria
for\u00a0the\u00a0selection of custody and settlement services. The\u00a0financial strength
of providers is regularly reviewed.
Liquidity risk
Principal risks
Segment
Controls to mitigate risks
Contingent event risk
Events that result in liquidity risk include a pandemic that
could lead to significantly higher levels of claims than
would normally be expected, or extreme events
impacting the timing of cash flows or the ability to
realise investments at\u00a0a\u00a0given value within a specified
timeframe.
Group, Corporate
Investments and Retail
The Group seeks to ensure that it meets its obligations as they fall due
and avoids incurring material losses on forced asset sales in order to meet
those obligations. A limited level of contingent liquidity risk is, however,
an accepted element of writing insurance contracts. It is furthermore a
consequence of the\u00a0markets in which the Group operates and the
execution of investment management strategies. However, the Group\u2019s
insurance businesses seek to\u00a0maintain sufficient liquid assets and standby
facilities to meet a prudent estimate of the cash outflows that may arise
from contingent events. The\u00a0level\u00a0of required liquidity is identified using
techniques including stress tests for\u00a0shock events and the profile of actual
liquid assets is regularly compared to the required liability profile. The
Group\u2019s treasury function provides\u00a0formal facilities to other areas of the
Group to cover contingent liquidity requirements arising from more
extreme events and where investment\u00a0assets may not be readily
realisable.
The Group holds certain non-core assets in its Corporate Investments unit
which are available for disposal. Our principal mitigation against timing or
valuation risk on these assets is that we are not a forced seller \u2013 we have
sufficient pools of liquidity and available actions across the Group which
can\u00a0be deployed to manage these risks.
Collateral liquidity risk
Within the annuities business, the use of financial
instruments to\u00a0hedge default, interest rate, currency and
inflation risks can\u00a0require the posting of collateral with
counterparties at\u00a0short\u00a0notice.
Asset Management,
Institutional Retirement
and Retail
The Group seeks to manage the risk of collateral calls by maintaining a
pool of assets which are eligible to be posted under its various collateral
arrangements. The collateral pool is sized to be able to withstand a range
of severe but plausible stresses, plus an additional risk-buffer for
prudence. The Group also maintains a series of management actions to
mitigate against highly-severe shocks.
Investment liquidity risk
Direct lending, sale and leaseback investments and
lifetime mortgage business are inherently illiquid forms
of investment, with limited secondary markets to realise
the\u00a0value of assets outside agreed redemption terms.
Asset Management,
Institutional Retirement
and Retail
Given the illiquid nature of the annuity and other liabilities the Group is
able and willing to take advantage of the premium offered by illiquid
assets. The Group, however, sets limits on the overall exposure to illiquid
investments taking account of the nature and type of liabilities that the
assets are held to meet.
As at 31 December 2025, the Group had \u00a32,901m (2024: \u00a33,757m) of cash and cash equivalents in shareholder funds and a \u00a31.5bn
syndicated committed revolving credit facility in place, provided by a number of its key relationship banks, maturing in August 2029.
17. Market risk
(i) Investment performance risk
(a) Equity securities
The Group controls its exposure to geographic price risks by using internal country risk exposure limits. These exposure limits are based on
macroeconomic data and key qualitative indicators. The latter take into account economic, social and political environments. The table below
indicates the Group\u2019s exposure to different equity markets around the world. Unit linked equity investments are excluded from the table as
the risk\u00a0is retained by the policyholder.
2025
2024
Exposure to worldwide equity markets
\u00a3m
\u00a3m
United Kingdom
108
75
North America
112
298
Europe
106
187
Japan
8
8
Asia Pacific
6
73
Other
28
37
Listed equities
368
678
Unlisted equities1
676
988
Holdings in unit trusts 2
1,028
1,282
Total equities
2,072
2,948
1. Unlisted equities are split between \u00a3269m (2024: \u00a3444m) United Kingdom, \u00a3355m (2024: \u00a3369m) Europe and \u00a352m (2024: \u00a3175m) North America.
2. Limited Partnerships are included within Holdings in unit trusts.
(b) Debt securities
The Group controls its exposure to geographic price risks by using internal country credit ratings. These ratings are based on macroeconomic
data and key qualitative indicators. The latter take into account economic, social and political environments. The table below indicates the
Group\u2019s\u00a0exposure to different debt security markets around the world. Unit linked debt securities are excluded from the table as the risk
is\u00a0retained\u00a0by the policyholder.
Total
Total
2025
2024
Total debt securities
\u00a3m
\u00a3m
United Kingdom
48,541
40,992
USA
22,500
30,347
Netherlands
2,127
1,934
France
1,282
1,521
Germany
395
413
GIIPS:
Ireland
1,999
1,915
Italy
123
115
Spain
275
214
Belgium
459
280
Rest of Europe
4,020
2,895
Rest of World
5,972
6,494
Collateralised debt obligations1
52
52
Total
87,745
87,172
Retained US portfolio 2
5,817
\u2013
1. All CDOs of \u00a352 m (2024: \u00a352m) are domiciled in the Rest of World.
2. Retained US portfolio (disclosed within Assets of operations classified as held for sale in the Consolidated Balance Sheet) includes the investment portfolio of the US PRT business that
the Group will continue to be exposed to after completion of the sale.
(c) Additional disclosures on shareholder securities exposure
2025
2025
2024
2024
\u00a3m
%
\u00a3m
%
Sovereigns, supras and sub-sovereigns
25,140
29
17,682
20
Banks:
Tier 2 and other subordinated
49
\u2013
75
\u2013
Senior
5,009
6
6,771
8
Covered
156
\u2013
212
\u2013
Financial services:
Tier 2 and other subordinated
227
\u2013
158
\u2013
Senior
2,124
2
2,740
3
Insurance:
Tier 2 and other subordinated
283
\u2013
224
\u2013
Senior
819
1
956
1
Consumer services and goods:
Cyclical
2,325
3
2,642
3
Non-cyclical
5,352
6
6,347
7
Healthcare
2,182
3
2,223
3
Infrastructure:
Social
7,255
8
6,875
8
Economic
5,960
7
6,029
7
Technology and telecoms
2,962
3
4,103
5
Industrials
1,553
2
1,576
2
Utilities
8,942
10
9,288
11
Energy
1,816
2
2,063
2
Commodities
776
1
814
1
Oil and gas
1,237
1
1,497
2
Real estate
4,503
5
4,497
5
Structured finance ABS/RMBS/CMBS/Other
3,267
4
4,487
5
Lifetime mortgage loans
5,756
7
5,861
7
Collateralised debt obligations
52
\u2013
52
\u2013
Total
87,745
100
87,172
100
Retained US portfolio 1
5,817
\u2013
2025
2024
Analysis of Sovereigns, supras and sub-sovereigns
\u00a3m
\u00a3m
Market value by region
United Kingdom
19,425
13,298
USA
3,688
2,528
Netherlands
68
29
France
124
377
Germany
118
123
Ireland
440
426
Rest of Europe
547
324
Rest of World
730
577
Total
25,140
17,682
Retained US portfolio 1
201
\u2013
1. Retained US portfolio (disclosed within Assets of operations classified as held for sale in the Consolidated Balance Sheet) includes the investment portfolio of the US PRT business that
the Group will continue to be exposed to after completion of the sale.
(ii) Currency risk
The Group has minimal exposure to currency risk from financial instruments held by business units in currencies other than their functional
currencies, nearly all such holdings are either backing insurance contracts in the same currency or are hedged back to GBP.
The Group operates internationally and as a result is exposed to foreign currency exchange risk arising from fluctuations in exchange rates of
various currencies. The largest US Dollar currency exposures relate to the Group\u2019s US business, which is classified as a held for sale disposal
group, The majority of currency exposures relating to Euros are held by LGIM Managers (Europe) Limited, a subsidiary of L&G \u2013 Asset
Management Limited. The Group does not hedge foreign currency revenues as these are substantially retained locally to support the growth
of the Group\u2019s business and meet local regulatory and market requirements.
Businesses aim to maintain sufficient assets in local currency to meet local currency liabilities. However, movements may impact the value of
the Group\u2019s consolidated shareholders\u2019 equity which is expressed in Sterling. This aspect of foreign exchange risk is monitored and managed
centrally, against pre-determined limits. These exposures are managed by aligning the deployment of regulatory capital by currency with
he Group\u2019s regulatory capital requirements by currency. Currency borrowings and derivatives may be used to manage exposures within the
limits that have been set. Hedge accounting is currently applied by the Group in order to hedge foreign exchange translation risk on its fixed
rate USD and EUR denominated borrowings through cross-currency swap contracts. Additionally, the Group has hedged the forecast sale
proceeds arising from the disposal of Legal & General America Inc. through forward exchange contracts. Refer to Note 14 for further details.
As at 31 December 2025, the Group held net assets of \u00a33.2bn (2024: net liabilities of \u00a31.5bn) of its total equity attributable to shareholders
in currencies, mainly US Dollar and Euro, other than the functional currency of the relevant business unit. The exchange risks inherent
in\u00a0these exposures may be mitigated through the use of derivatives, mainly forward currency contracts.
Consistent with the Group\u2019s accounting policies, the profits of overseas business units (reported as functional currencies) are translated at
average exchange rates and the net assets (reported as functional currencies) at the closing rate for the reporting period. Information on
the Group\u2019s assets for the current year includes only continuing operations. It therefore excludes contracts associated with the Group\u2019s US
insurance entity, which are classified as assets and liabilities held for sale in the Consolidated Balance Sheet.
A 10% increase (weakening of foreign currencies) or decrease (strengthening of foreign currencies) in these rates would increase or reduce
the profit for the year and net assets as follows:
A 10% increase in
A 10% decrease in
USD:GBP exchange rate
USD:GBP exchange rate
2025
2024
2025
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Profit for the year1
5
(7)
(6)
9
Net assets attributable to USD exposures 1
(158)
(92)
193
111
A 10% increase in
A 10% decrease in
EUR:GBP exchange rate
EUR:GBP exchange rate
2025
2024
2025
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Profit for the year1
\u2013
\u2013
\u2013
\u2013
Net assets attributable to EUR exposures 1
(98)
(17)
120
22
1. Profit for the year impacts relate only to overseas business units where the functional currency is not Sterling. Net asset impacts include both functional currency and non-functional
currency exposures.
A 10% increase or decrease in the USD:GBP rate would impact the profit for the year of operations classified as held for sale by \u00a3(11)m and
\u00a313m respectively and impact net assets by \u00a3(59)m and \u00a372m respectively.
18. Credit risk
The Group\u2019s exposure to credit risk arises from its offering of insurance and investment products. The investments of shareholders\u2019,
policyholders\u2019\u00a0and segregated clients\u2019 monies require credit risks to be taken, as well as the hedging of insurance (including reinsurance)
and\u00a0other\u00a0financial risks.
Oversight of credit risk management is carried out by the Group Risk Financial Risk Committee (GRFRC) under delegation from the Board.
The GRFRC's remit includes proposing the Group\u2019s appetite for credit risk in aggregate and by issuers, sectors and geography and monitoring
actual exposures relative to appetite. The GRFRC also considers credit risk implicit in new asset classes and corporate transactions and
advises on appropriate counterparty risk tolerances. The Group controls its exposure to counterparty credit risk through defining the
minimum financial strength of the counterparties with which it will deal and setting exposure tolerances for these counterparties, which
are monitored and reviewed by operational management on a counterparty-by-counterparty basis.
The credit profile of the Group\u2019s assets exposed to credit risk is shown below. This includes both externally and internally rated positions.
Unit linked assets have not been included as shareholders are not directly exposed to the associated credit risk. Additionally, assets such
as equity securities, deferred acquisition costs and tax have no exposure to the associated credit risk and therefore have also been excluded.
For externally rated assets, the credit rating bands are provided by independent rating agencies. Unrated traded instruments are assigned
a rating through a portfolio review process or through a committee, depending on complexity. Certain assets require an internal rating even
when an external rating is already available, if these constitute material traded exposures or are complex securitisations or direct investments.
In these cases, internal ratings are assigned by either the Asset Management Direct Investment rating team or the asset management firm
that originated the transaction.
The carrying amount of the financial assets recorded in the financial statements represents the maximum exposure to credit risk before
taking\u00a0account of collateral held. Collateral is held to mitigate credit risk exposures, by virtue of transactions in long-dated derivatives and
stock\u00a0lending activities.
Shareholder
AAA
AA
A
BBB
BB and
below
Other
Total
As at 31 December 2025
Notes
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Government securities
134
20,669
493
185
34
3
21,518
Other fixed rate securities
1,262
7,245
21,606
19,139
310
32
49,594
Variable rate securities
960
2,695
3,402
3,021
99
12
10,189
Lifetime mortgages
\u2013
4,823
458
392
\u2013
83
5,756
Accrued interest
23
166
235
255
3
6
688
Total debt securities
2,379
35,598
26,194
22,992
446
136
87,745
Loans
\u2013
698
44
\u2013
\u2013
522
1,264
Derivative assets
14
\u2013
767
40,686
\u2013
\u2013
172
41,625
Cash and cash equivalents
16
133
594
1,730
165
\u2013
279
2,901
Reinsurance contract assets
499
3,257
4,848
234
\u2013
2
8,840
Other assets
4
38
198
13
1
3,731
3,985
Total
3,015
40,952
73,700
23,404
447
4,842
146,360
Assets of operations classified as held for sale
1,930
2,052
3,789
3,883
188
275
12,117
AAA
AA
A
BBB
BB and
below
Other
Total
As at 31 December 2024
Notes
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Government securities
199
13,741
232
159
18
1
14,350
Other fixed rate securities
1,988
7,690
23,145
21,696
361
42
54,922
Variable rate securities
774
2,703
4,165
3,558
122
16
11,338
Lifetime mortgages
\u2013
4,916
483
402
\u2013
60
5,861
Accrued interest
25
136
256
277
6
1
701
Total debt securities
2,986
29,186
28,281
26,092
507
120
87,172
Loans
\u2013
226
303
\u2013
\u2013
2,185
2,714
Derivative assets
14
\u2013
733
48,298
\u2013
\u2013
164
49,195
Cash and cash equivalents
16
1,420
408
1,628
72
\u2013
229
3,757
Reinsurance contract assets
\u2013
3,889
5,047
228
\u2013
1
9,165
Other assets
12
152
176
29
\u2013
3,783
4,152
Total
4,418
34,594
83,733
26,421
507
6,482
156,155
Impairment
The table below shows the gross carrying value of financial investments measured at FVOCI\u00a0and amortised cost split by credit rating,
separately identifying those investments for which a 12-month ECL (i.e. Stage 1) or Lifetime ECL (i.e. Stage 2 and 3) is calculated, as well
as any loss allowances recognised. As at 31 December 2025, the Group did not have any purchased or originated credit-impaired financial
investments (2024:\u00a0no purchased or originated credit-impaired financial investments).
Assets under
Stage 1
Assets under
Stage 2 and 3
Total
Assets under
Stage 1
Assets under
Stage 2 and 3
Total
FVOCI1
2025
2025
2025
2024
2024
2024
Shareholder
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
AAA
\u2013
\u2013
\u2013
88
\u2013
88
AA
1,857
\u2013
1,857
1,697
\u2013
1,697
A
\u2013
\u2013
\u2013
93
\u2013
93
BBB
\u2013
\u2013
\u2013
43
\u2013
43
BB and below
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Other
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total gross
1,857
\u2013
1,857
1,921
\u2013
1,921
ECL
(8)
\u2013
(8)
(7)
\u2013
(7)
1. \u00a3404m assets of operations classified as held for sale measured under FVOCI with \u00a3nil ECL.
Assets under
Stage 1
Assets under
Stage 2 and 3
Total
Assets under
Stage 1
Assets under
Stage 2 and 3
Total
Amortised cost 1
2025
2025
2025
2024
2024
2024
Shareholder
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
AAA
215
\u2013
215
242
\u2013
242
AA
539
\u2013
539
542
\u2013
542
A
3,534
\u2013
3,534
3,873
\u2013
3,873
BBB
3,717
\u2013
3,717
4,312
\u2013
4,312
BB and below
\u2013
\u2013
\u2013
\u2013
29
29
Other
194
\u2013
194
83
\u2013
83
Total gross
8,199
\u2013
8,199
9,052
29
9,081
ECL
(32)
\u2013
(32)
(32)
\u2013
(32)
Total net amount
8,167
\u2013
8,167
9,020
29
9,049
1. \u00a31,722m assets of operations classified as held for sale measured under amortised cost with \u00a31m ECL.
Other financial assets at amortised cost are predominantly unrated other receivables with an immaterial loss allowance
(2024:\u00a0immaterial\u00a0loss\u00a0allowance).
Offsetting
Financial assets and liabilities are offset in the Consolidated Balance Sheet when the Group has a legally enforceable right to offset and has
the intention to settle the asset and liability on a net basis, or to realise the asset and liability simultaneously.
The Group has not entered into any financial transactions resulting in financial assets and liabilities being offset in the Consolidated Balance
Sheet. The table below shows the financial assets and liabilities that are subject to master netting agreements in shareholder assets and
liabilities. Unit linked assets and liabilities have not been included as shareholders are not exposed to the risks on these policies.
Amounts subject to enforceable netting arrangements
Amounts under master netting arrangements but not offset
Gross and net
amounts reported
in the Consolidated
Balance Sheet
Related financial
instruments 1
Cash collaternal2
Securities
collateral
pledged 2
Net amount
As at 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Derivative assets
41,625
(40,202)
(187)
(1,236)
\u2013
Reverse repurchase agreements
1,060
\u2013
\u2013
(1,060)
\u2013
Total
42,685
(40,202)
(187)
(2,296)
\u2013
Derivative liabilities
(49,451)
40,202
1,477
7,772
\u2013
Repurchase agreement
(1,654)
\u2013
\u2013
1,654
\u2013
Total
(51,105)
40,202
1,477
9,426
\u2013
Amounts subject to enforceable netting arrangements
Amounts under master netting arrangements but not offset
Gross and net
amounts reported
in the Consolidated
Balance Sheet
Related financial
instruments 1
Cash collaternal2
Securities
collateral
pledged2
Net amount
As at 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Derivative assets
49,195
(48,433)
(85)
(677)
\u2013
Reverse repurchase agreements
2,630
\u2013
\u2013
(2,630)
\u2013
Total
51,825
(48,433)
(85)
(3,307)
\u2013
Derivative liabilities
(54,274)
48,433
630
5,211
\u2013
Repurchase agreement
(2,488)
\u2013
\u2013
2,488
\u2013
Total
(56,762)
48,433
630
7,699
\u2013
1. Related financial instruments represents outstanding amounts with the same counterparty which, under agreements such as the ISDA Master Agreement, could be offset and\u00a0settled
net following certain predetermined events.
2. Cash and securities held may exceed target levels due to the complexities of operational collateral management, timing and agreements in place with individual counterparties.
In the tables above, the amounts of assets or liabilities presented in the Consolidated Balance Sheet are offset first by financial instruments that
have the right of offset under master netting or similar arrangements with any remaining amount reduced by cash and securities collateral.
19. Insurance risk
The Group is exposed to insurance risk as a consequence of offering the principal products outlined in Note 8. Insurance risk is the exposure
to\u00a0loss arising from insurance risk experience being different to that anticipated. Detailed below are the insurance risks associated with each
of\u00a0the Group\u2019s segments along with the mitigating controls operated. They are applicable to all stated products across the Group.
Principal risks
Segment
Controls to mitigate risks
Longevity, mortality and morbidity risks
For contracts providing death benefits, higher mortality
rates would lead to an increase in claims costs. The cost
of\u00a0health related claims depends on both the incidence
of\u00a0policyholders becoming ill and the duration over
which they remain ill. Higher than expected incidence or
duration would increase costs over the level currently
assumed in the calculation of liabilities.
Retail
The pricing of protection business is based on assumptions as to
future\u00a0trends\u00a0in mortality and morbidity having regard to past experience.
Underwriting criteria are defined setting out the risks that are unacceptable
and\u00a0the terms for non-standard risks presented by the lives to be insured.
Extensive use of reinsurance is made within the UK retail protection business,
placing a proportion of all risks meeting prescribed criteria. Mortality and
morbidity experience is compared to that assumed within the pricing and
reserving basis with variances subject to actuarial investigation.
For annuity contracts, the Group is exposed to the risk
that mortality experience is lower than assumed. Lower
than expected mortality would require payments to be
made for\u00a0longer and increase the cost of benefits
provided. Lifetime mortgage business also explicitly has
some exposure to the life expectancy of borrowers.
Institutional Retirement
and Retail
Annuity business is priced having regard to current levels and trends in
improvements in future mortality. Enhanced annuities, which are priced
taking account of impairments to life expectancy, are subject to specific
underwriting criteria. Certain annuitant mortality risks, including enhanced
annuities, are placed with reinsurers. The Group regularly reviews its
mortality experience and\u00a0industry projections of longevity and adjusts the
pricing and valuation assumptions accordingly. The selective use of
reinsurance acts to reduce the\u00a0impact of significant future variations in life
expectancy. In pricing lifetime mortgage business, account is taken of
levels and trends in mortality rates in\u00a0setting the amounts that are
advanced to borrowers relative to the value of\u00a0the property on which the
loan is secured.
Persistency risk
In the early years of a policy, lapses may result in a loss
to\u00a0the Group, as the acquisition costs associated with
the\u00a0contract would not have been recovered from
product\u00a0margins.
Retail
The pricing and valuation assumptions for protection business include
allowance for policy lapses. Lapse risk is somewhat mitigated by
reinsurance. Actual trends in policy lapse rates are monitored against
these assumptions with variances being subject to actuarial investigation.
Expense risk
In pricing long-term insurance business, assumptions
are\u00a0made as to the future cost of product servicing.
A\u00a0significant adverse divergence in actual expenses
experience could reduce product profitability.
Institutional Retirement
and Retail
In determining pricing assumptions, account is taken of expected price and
wage inflation, with stress testing used to evaluate the effect of significant
deviations. Actual product servicing costs are monitored relative to the
costs assumed within the product pricing basis, with variances
investigated.
Concentration (catastrophe) risk
Insurance risk may be concentrated in geographic
regions, altering the risk profile of the Group. The most
significant exposure of this type arises for group
protection business, where a single event could result in
a large number of related claims.
Retail
Group protection business contracts include an \u2018event limit\u2019 capping the
total liability under the policy from a single event. Excess of loss
reinsurance further mitigates loss from the exposure. Additionally,
exposure by location is monitored to ensure there is a geographic spread
of risk. Catastrophe reinsurance cover also mitigates loss from
concentrations of risk.
Epidemic (catastrophe) risk
The spread of an epidemic could cause large
aggregate\u00a0claims across the Group\u2019s portfolio
of\u00a0protection\u00a0businesses.
Retail
The pricing basis for protection business includes an assessment of
potential claims as a result of epidemic risks. Quota share and excess of
loss reinsurance contracts are used by individual and group protection,
respectively, to further mitigate the risk. Depending on the nature of an
epidemic, mortality experience may lead to a reduction in the cost of
claims for annuity business. Pricing for new business can also be updated
to reflect the change in expected claims.
Accumulation of risks
There is limited potential for single incidents to give rise to a large number of claims across the different contract types written by the Group.
However, there are potentially material correlations of insurance risk with other types of risk exposure. The Group\u2019s capital model seeks
to\u00a0measure risk correlations particularly those that would tend to be more acute as the underlying risk scenarios become more extreme.
An\u00a0example of the accumulation of risk is the correlation between reinsurer credit risk with mortality and morbidity exposures.
Operational risk
Operational risk is defined as loss arising from inadequate or failed internal processes, people, systems or external events. Potential for
exposure to such risk extends to all of the Group\u2019s businesses. The Group has constructed a framework of internal controls to minimise
material loss from operational risk events recognising that no system of internal control can completely eliminate the risk of error, financial
loss, fraudulent action or\u00a0reputational damage.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-657": { "value": "
Market risk
Exposure to loss as a direct or indirect result of fluctuations in the value of, or income from, specific assets.
Market risks
Principal risks
Segment
Controls to mitigate risks
Investment performance risk
The Group is exposed to the risk that the income from
and\u00a0value of, assets held to back insurance liabilities and
capital requirements do not perform in line with
investment and product pricing assumptions leading to a
potential financial loss.
Asset Management,
Institutional Retirement
and Retail
Models are used to assess the impact of a range of future return scenarios
on\u00a0investment values and associated liabilities in order to determine
optimum portfolios of invested assets. In addition, risk is managed through
maintaining a diversified range of investments. For annuities, which are
sensitive to interest rate and inflation risk, analysis of the liabilities is
undertaken to create a portfolio of\u00a0securities, the value of which changes
in line with the value of liabilities when\u00a0interest rates change.
For unit linked contracts, there is a risk of volatility in
asset management fee income due to the impact of
interest rate and market price movements on the fair
value of the assets held in the linked funds, on which
investment management fees are based. There is also
the risk of expense over-runs should the market depress
the level of charges which could be imposed.
Asset Management
and\u00a0Retail
The risk is managed through maintaining a diversified range of funds in
which\u00a0customers may invest. The performance of linked investment funds
relative to their investment objectives is subject to regular monitoring.
Periodic\u00a0assessment is also made of the long-term profitability to the
Group of\u00a0these funds. For some contracts the Group\u00a0has discretion over
the level of\u00a0management charges levied.
Property risk
Lifetime mortgages include a no negative equity
guarantee which transfers a potential loss exposure to
the Group as\u00a0a\u00a0result of low house price inflation and an
exposure to\u00a0specific properties which may experience
lower house price inflation for whatever reason.
Institutional Retirement
and Retail
To mitigate the risk, maximum loan to value ratios are set for all lending
with further underwriting criteria setting out acceptable properties for
lending purposes. Policy terms also require properties to be fully insured
and maintained, including the right of inspection. The diversification of
lending by\u00a0property type and geographic region seeks to control
exposures to specific\u00a0aspects in the property market.
The Group builds homes across the\u00a0residential market,
invest in large commercial and residential development
projects and along with Institutional Retirement manage
several developed real estate assets. The Group is
exposed to the risk that the income from and the value
of, property assets held to back insurance liabilities and
capital requirements do not perform in line with
investment and product pricing assumptions leading
to\u00a0a\u00a0potential financial loss. Valuations of real estate
assets depend both on property-specific and wider
market drivers. Properties under development can be
exposed to additional risks which impact investment
performance, including significant increases in the cost of
materials or disruption to\u00a0supply chains.
Asset Management,
Corporate Investments
and Institutional
Retirement
Diversification by geographic region and property type avoids
concentration of\u00a0exposures to specific areas of the property market.
Commercial property exposure in the Institutional Retirement annuity
portfolio is relatively limited and\u00a0is predominantly underpinned by long-
term leases with investment grade tenants. Property development activity
is relatively limited and where appropriate, key methods are adopted to
manage development risk, such\u00a0as\u00a0fixed price construction contracts,
forward sales, diversification of\u00a0contracting counterparties and pre-
leasing.
Currency risk
To diversify credit risk within the annuities business
corporate bond portfolio, investments are held in
corporate\u00a0bonds denominated in non-sterling currencies.
Asset Management also invest in overseas assets.
Fluctuations in the value of, or income from, these assets
relative to liabilities denominated in sterling could result
in\u00a0unforeseen foreign exchange losses.
Asset Management,
Institutional Retirement
and Retail
To mitigate the risk of loss from currency fluctuations, currency swaps\u00a0and
forwards are used to hedge exposures to corporate bonds denominated in
currencies other than sterling. Hedging arrangements are placed with
strongly rated counterparties with collateral requirements being subject to
regular review and reconciliation with the counterparties. The hedges do
not eliminate all currency risk and the Group retains some residual risk.
The consolidated international subsidiaries and financial
instruments of subsidiaries are translated into sterling in
the consolidated accounts. Changes in the sterling value
can impact\u00a0consolidated equity but may be mitigated by
associated hedging transactions.
Group
To mitigate the risk of loss from currency translation the Group
continuously monitors its exposure and executes appropriate hedging
transactions when necessary. Hedging arrangements are placed with
strongly rated counterparties with collateral requirements being subject to
regular review and reconciliation with the counterparties.
From time to time, the Group may opt to raise capital in
overseas debt markets when the associated borrowing
costs are more favourable than those available
domestically. Such arrangements expose the Group to
foreign exchange risk, as movements in exchange rates
create uncertainty regarding the ultimate repayment
amount.
Group
To mitigate the risk of loss from currency fluctuations the Group
continuously monitors its exposure and executes appropriate hedging
transactions when necessary. Hedging arrangements are placed with
strongly rated counterparties with collateral requirements being subject to
regular review and reconciliation with the counterparties.
Inflation risk
Inflation risk is the potential of realising a loss because
of\u00a0relative or absolute changes in inflation rates.
Annuity\u00a0contracts may provide for future benefits to be
paid\u00a0taking account of changes in the level of inflation.
Annuity contracts in payment may include an annual
adjustment for movements in price indices.
Institutional Retirement
and Retail
The investment strategy for the annuities business takes explicit account
of\u00a0the\u00a0effect of movements in price indices on contracted liabilities.
Significant\u00a0exposures that may adversely impact profitability are hedged
using\u00a0inflation swaps. Annuity contracts also typically include caps and
floors\u00a0on the annual increase in inflation-linked benefit payments. The
hedges do not eliminate all inflation risk and the Group retains some
residual risk.
Interest rate risk
Interest rate risk is the risk that the Group is exposed
to\u00a0lower returns or loss as a direct or indirect result
of\u00a0fluctuations in the value of, or income from, specific
assets and liabilities arising from changes in underlying
interest rates.
Group, Institutional
Retirement and Retail
To mitigate the risk that guarantees and commitments are not met,
financial instruments are purchased, which broadly match the nature and
terms of the expected policy benefits payable. The composition of the
investment portfolio is governed by the nature of the insurance or savings
liabilities, the expected rate of return applicable on each class of asset and
the capital available to meet the price fluctuations of each asset class,
relative to the liabilities they support.
17. Market risk
(i) Investment performance risk
(a) Equity securities
The Group controls its exposure to geographic price risks by using internal country risk exposure limits. These exposure limits are based on
macroeconomic data and key qualitative indicators. The latter take into account economic, social and political environments. The table below
indicates the Group\u2019s exposure to different equity markets around the world. Unit linked equity investments are excluded from the table as
the risk\u00a0is retained by the policyholder.
2025
2024
Exposure to worldwide equity markets
\u00a3m
\u00a3m
United Kingdom
108
75
North America
112
298
Europe
106
187
Japan
8
8
Asia Pacific
6
73
Other
28
37
Listed equities
368
678
Unlisted equities1
676
988
Holdings in unit trusts 2
1,028
1,282
Total equities
2,072
2,948
1. Unlisted equities are split between \u00a3269m (2024: \u00a3444m) United Kingdom, \u00a3355m (2024: \u00a3369m) Europe and \u00a352m (2024: \u00a3175m) North America.
2. Limited Partnerships are included within Holdings in unit trusts.
(b) Debt securities
The Group controls its exposure to geographic price risks by using internal country credit ratings. These ratings are based on macroeconomic
data and key qualitative indicators. The latter take into account economic, social and political environments. The table below indicates the
Group\u2019s\u00a0exposure to different debt security markets around the world. Unit linked debt securities are excluded from the table as the risk
is\u00a0retained\u00a0by the policyholder.
Total
Total
2025
2024
Total debt securities
\u00a3m
\u00a3m
United Kingdom
48,541
40,992
USA
22,500
30,347
Netherlands
2,127
1,934
France
1,282
1,521
Germany
395
413
GIIPS:
Ireland
1,999
1,915
Italy
123
115
Spain
275
214
Belgium
459
280
Rest of Europe
4,020
2,895
Rest of World
5,972
6,494
Collateralised debt obligations1
52
52
Total
87,745
87,172
Retained US portfolio 2
5,817
\u2013
1. All CDOs of \u00a352 m (2024: \u00a352m) are domiciled in the Rest of World.
2. Retained US portfolio (disclosed within Assets of operations classified as held for sale in the Consolidated Balance Sheet) includes the investment portfolio of the US PRT business that
the Group will continue to be exposed to after completion of the sale.
(c) Additional disclosures on shareholder securities exposure
2025
2025
2024
2024
\u00a3m
%
\u00a3m
%
Sovereigns, supras and sub-sovereigns
25,140
29
17,682
20
Banks:
Tier 2 and other subordinated
49
\u2013
75
\u2013
Senior
5,009
6
6,771
8
Covered
156
\u2013
212
\u2013
Financial services:
Tier 2 and other subordinated
227
\u2013
158
\u2013
Senior
2,124
2
2,740
3
Insurance:
Tier 2 and other subordinated
283
\u2013
224
\u2013
Senior
819
1
956
1
Consumer services and goods:
Cyclical
2,325
3
2,642
3
Non-cyclical
5,352
6
6,347
7
Healthcare
2,182
3
2,223
3
Infrastructure:
Social
7,255
8
6,875
8
Economic
5,960
7
6,029
7
Technology and telecoms
2,962
3
4,103
5
Industrials
1,553
2
1,576
2
Utilities
8,942
10
9,288
11
Energy
1,816
2
2,063
2
Commodities
776
1
814
1
Oil and gas
1,237
1
1,497
2
Real estate
4,503
5
4,497
5
Structured finance ABS/RMBS/CMBS/Other
3,267
4
4,487
5
Lifetime mortgage loans
5,756
7
5,861
7
Collateralised debt obligations
52
\u2013
52
\u2013
Total
87,745
100
87,172
100
Retained US portfolio 1
5,817
\u2013
2025
2024
Analysis of Sovereigns, supras and sub-sovereigns
\u00a3m
\u00a3m
Market value by region
United Kingdom
19,425
13,298
USA
3,688
2,528
Netherlands
68
29
France
124
377
Germany
118
123
Ireland
440
426
Rest of Europe
547
324
Rest of World
730
577
Total
25,140
17,682
Retained US portfolio 1
201
\u2013
1. Retained US portfolio (disclosed within Assets of operations classified as held for sale in the Consolidated Balance Sheet) includes the investment portfolio of the US PRT business that
the Group will continue to be exposed to after completion of the sale.
(ii) Currency risk
The Group has minimal exposure to currency risk from financial instruments held by business units in currencies other than their functional
currencies, nearly all such holdings are either backing insurance contracts in the same currency or are hedged back to GBP.
The Group operates internationally and as a result is exposed to foreign currency exchange risk arising from fluctuations in exchange rates of
various currencies. The largest US Dollar currency exposures relate to the Group\u2019s US business, which is classified as a held for sale disposal
group, The majority of currency exposures relating to Euros are held by LGIM Managers (Europe) Limited, a subsidiary of L&G \u2013 Asset
Management Limited. The Group does not hedge foreign currency revenues as these are substantially retained locally to support the growth
of the Group\u2019s business and meet local regulatory and market requirements.
Businesses aim to maintain sufficient assets in local currency to meet local currency liabilities. However, movements may impact the value of
the Group\u2019s consolidated shareholders\u2019 equity which is expressed in Sterling. This aspect of foreign exchange risk is monitored and managed
centrally, against pre-determined limits. These exposures are managed by aligning the deployment of regulatory capital by currency with
he Group\u2019s regulatory capital requirements by currency. Currency borrowings and derivatives may be used to manage exposures within the
limits that have been set. Hedge accounting is currently applied by the Group in order to hedge foreign exchange translation risk on its fixed
rate USD and EUR denominated borrowings through cross-currency swap contracts. Additionally, the Group has hedged the forecast sale
proceeds arising from the disposal of Legal & General America Inc. through forward exchange contracts. Refer to Note 14 for further details.
As at 31 December 2025, the Group held net assets of \u00a33.2bn (2024: net liabilities of \u00a31.5bn) of its total equity attributable to shareholders
in currencies, mainly US Dollar and Euro, other than the functional currency of the relevant business unit. The exchange risks inherent
in\u00a0these exposures may be mitigated through the use of derivatives, mainly forward currency contracts.
Consistent with the Group\u2019s accounting policies, the profits of overseas business units (reported as functional currencies) are translated at
average exchange rates and the net assets (reported as functional currencies) at the closing rate for the reporting period. Information on
the Group\u2019s assets for the current year includes only continuing operations. It therefore excludes contracts associated with the Group\u2019s US
insurance entity, which are classified as assets and liabilities held for sale in the Consolidated Balance Sheet.
A 10% increase (weakening of foreign currencies) or decrease (strengthening of foreign currencies) in these rates would increase or reduce
the profit for the year and net assets as follows:
A 10% increase in
A 10% decrease in
USD:GBP exchange rate
USD:GBP exchange rate
2025
2024
2025
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Profit for the year1
5
(7)
(6)
9
Net assets attributable to USD exposures 1
(158)
(92)
193
111
A 10% increase in
A 10% decrease in
EUR:GBP exchange rate
EUR:GBP exchange rate
2025
2024
2025
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Profit for the year1
\u2013
\u2013
\u2013
\u2013
Net assets attributable to EUR exposures 1
(98)
(17)
120
22
1. Profit for the year impacts relate only to overseas business units where the functional currency is not Sterling. Net asset impacts include both functional currency and non-functional
currency exposures.
A 10% increase or decrease in the USD:GBP rate would impact the profit for the year of operations classified as held for sale by \u00a3(11)m and
\u00a313m respectively and impact net assets by \u00a3(59)m and \u00a372m respectively.
", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-658": { "value": "
Credit risk
Exposure to loss if another party fails to perform its financial obligations to the Group or suffers a rating downgrade.
Credit risk
Principal risks
Segment
Controls to mitigate risks
Bond default and rating downgrade risk
A significant portfolio of corporate bonds and
commercial loans are held to back the liabilities arising
from writing insurance and annuities business. Whilst
the portfolio is diversified, the asset class is inherently
exposed to the risk of issuer default and rating
downgrade, with the possibility of financial loss.
Institutional Retirement
and Retail
Portfolio level and specific issuer limits are set by financial strength rating,
sector and geographic region to limit exposure to a default event. Issuer
limits are regularly reviewed to take account of changes in market
conditions, sector performance and the re-assessment of financial
strength by rating agencies and the Group\u2019s own internal analysis.
Exposures are monitored relative to limits. Financial instruments are also
used to mitigate the impact of rating downgrades and defaults. If
appropriate, actions are taken to trade out investments at risk of default.
Reinsurance counterparty risk
Exposure to insurance risk is mitigated by ceding part of
the\u00a0risks assumed to the reinsurance market. Default of
a\u00a0reinsurer would require the business to be re-brokered
potentially on less advantageous terms, or for the risks
to\u00a0be borne directly resulting in possible financial loss.
The\u00a0Group is required to carry an element of associated
credit risk capital on its balance sheet should the
business not be re-brokered on the same terms.
Institutional Retirement
and Retail
When selecting new reinsurance partners for its business, the Group
considers only companies which have a minimum credit rating equivalent
to AA- unless there is a legally binding parental guarantee from a higher
rated entity. For each reinsurer, exposure limits are determined based on
credit ratings and projected exposure over the term of the treaty. Actual
exposures are regularly monitored relative to these limits. Similarly, for
longevity and credit risk syndication transactions, the\u00a0Group targets the
use of strongly rated counterparties and seeks to\u00a0ensure that positions are
fully collateralised. The adequacy and quality\u00a0of\u00a0collateral is subject to
ongoing monitoring.
Property lending counterparty risk
As part of our asset diversification strategy, we hold
property lending and sale and leaseback investments.
We\u00a0are inherently exposed to the risk of default by a
borrower or tenant.
Institutional Retirement
and Retail
Each property lending and sale and leaseback investment transaction is
subject to a due diligence process to assess the credit risks implicit in the
transaction and confirm that any risk of default has been appropriately
mitigated. We also protect our interests by taking security over the
underlying property associated with each investment transaction.
Banking counterparty risk
The Group is exposed to potential financial loss should
banks or the issuers of financial instruments default
on\u00a0their obligations to us. We are also exposed
to\u00a0counterparty risks in respect of the providers
of\u00a0settlement\u00a0and custody services.
Group, Asset
Management,
Institutional Retirement
and Retail
The Group controls its exposures to banking counterparties and the
issuers of\u00a0financial instruments using a framework of counterparty limits.
These limits take account of the relative financial strength of the
counterparty as well as other bank counterparty exposures that the
Group\u00a0may have. Limits are subject to regular review with actual
exposures monitored against limits. The Group has\u00a0defined criteria
for\u00a0the\u00a0selection of custody and settlement services. The\u00a0financial strength
of providers is regularly reviewed.
18. Credit risk
The Group\u2019s exposure to credit risk arises from its offering of insurance and investment products. The investments of shareholders\u2019,
policyholders\u2019\u00a0and segregated clients\u2019 monies require credit risks to be taken, as well as the hedging of insurance (including reinsurance)
and\u00a0other\u00a0financial risks.
Oversight of credit risk management is carried out by the Group Risk Financial Risk Committee (GRFRC) under delegation from the Board.
The GRFRC's remit includes proposing the Group\u2019s appetite for credit risk in aggregate and by issuers, sectors and geography and monitoring
actual exposures relative to appetite. The GRFRC also considers credit risk implicit in new asset classes and corporate transactions and
advises on appropriate counterparty risk tolerances. The Group controls its exposure to counterparty credit risk through defining the
minimum financial strength of the counterparties with which it will deal and setting exposure tolerances for these counterparties, which
are monitored and reviewed by operational management on a counterparty-by-counterparty basis.
The credit profile of the Group\u2019s assets exposed to credit risk is shown below. This includes both externally and internally rated positions.
Unit linked assets have not been included as shareholders are not directly exposed to the associated credit risk. Additionally, assets such
as equity securities, deferred acquisition costs and tax have no exposure to the associated credit risk and therefore have also been excluded.
For externally rated assets, the credit rating bands are provided by independent rating agencies. Unrated traded instruments are assigned
a rating through a portfolio review process or through a committee, depending on complexity. Certain assets require an internal rating even
when an external rating is already available, if these constitute material traded exposures or are complex securitisations or direct investments.
In these cases, internal ratings are assigned by either the Asset Management Direct Investment rating team or the asset management firm
that originated the transaction.
The carrying amount of the financial assets recorded in the financial statements represents the maximum exposure to credit risk before
taking\u00a0account of collateral held. Collateral is held to mitigate credit risk exposures, by virtue of transactions in long-dated derivatives and
stock\u00a0lending activities.
Shareholder
AAA
AA
A
BBB
BB and
below
Other
Total
As at 31 December 2025
Notes
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Government securities
134
20,669
493
185
34
3
21,518
Other fixed rate securities
1,262
7,245
21,606
19,139
310
32
49,594
Variable rate securities
960
2,695
3,402
3,021
99
12
10,189
Lifetime mortgages
\u2013
4,823
458
392
\u2013
83
5,756
Accrued interest
23
166
235
255
3
6
688
Total debt securities
2,379
35,598
26,194
22,992
446
136
87,745
Loans
\u2013
698
44
\u2013
\u2013
522
1,264
Derivative assets
14
\u2013
767
40,686
\u2013
\u2013
172
41,625
Cash and cash equivalents
16
133
594
1,730
165
\u2013
279
2,901
Reinsurance contract assets
499
3,257
4,848
234
\u2013
2
8,840
Other assets
4
38
198
13
1
3,731
3,985
Total
3,015
40,952
73,700
23,404
447
4,842
146,360
Assets of operations classified as held for sale
1,930
2,052
3,789
3,883
188
275
12,117
AAA
AA
A
BBB
BB and
below
Other
Total
As at 31 December 2024
Notes
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Government securities
199
13,741
232
159
18
1
14,350
Other fixed rate securities
1,988
7,690
23,145
21,696
361
42
54,922
Variable rate securities
774
2,703
4,165
3,558
122
16
11,338
Lifetime mortgages
\u2013
4,916
483
402
\u2013
60
5,861
Accrued interest
25
136
256
277
6
1
701
Total debt securities
2,986
29,186
28,281
26,092
507
120
87,172
Loans
\u2013
226
303
\u2013
\u2013
2,185
2,714
Derivative assets
14
\u2013
733
48,298
\u2013
\u2013
164
49,195
Cash and cash equivalents
16
1,420
408
1,628
72
\u2013
229
3,757
Reinsurance contract assets
\u2013
3,889
5,047
228
\u2013
1
9,165
Other assets
12
152
176
29
\u2013
3,783
4,152
Total
4,418
34,594
83,733
26,421
507
6,482
156,155
Impairment
The table below shows the gross carrying value of financial investments measured at FVOCI\u00a0and amortised cost split by credit rating,
separately identifying those investments for which a 12-month ECL (i.e. Stage 1) or Lifetime ECL (i.e. Stage 2 and 3) is calculated, as well
as any loss allowances recognised. As at 31 December 2025, the Group did not have any purchased or originated credit-impaired financial
investments (2024:\u00a0no purchased or originated credit-impaired financial investments).
Assets under
Stage 1
Assets under
Stage 2 and 3
Total
Assets under
Stage 1
Assets under
Stage 2 and 3
Total
FVOCI1
2025
2025
2025
2024
2024
2024
Shareholder
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
AAA
\u2013
\u2013
\u2013
88
\u2013
88
AA
1,857
\u2013
1,857
1,697
\u2013
1,697
A
\u2013
\u2013
\u2013
93
\u2013
93
BBB
\u2013
\u2013
\u2013
43
\u2013
43
BB and below
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Other
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total gross
1,857
\u2013
1,857
1,921
\u2013
1,921
ECL
(8)
\u2013
(8)
(7)
\u2013
(7)
1. \u00a3404m assets of operations classified as held for sale measured under FVOCI with \u00a3nil ECL.
Assets under
Stage 1
Assets under
Stage 2 and 3
Total
Assets under
Stage 1
Assets under
Stage 2 and 3
Total
Amortised cost 1
2025
2025
2025
2024
2024
2024
Shareholder
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
AAA
215
\u2013
215
242
\u2013
242
AA
539
\u2013
539
542
\u2013
542
A
3,534
\u2013
3,534
3,873
\u2013
3,873
BBB
3,717
\u2013
3,717
4,312
\u2013
4,312
BB and below
\u2013
\u2013
\u2013
\u2013
29
29
Other
194
\u2013
194
83
\u2013
83
Total gross
8,199
\u2013
8,199
9,052
29
9,081
ECL
(32)
\u2013
(32)
(32)
\u2013
(32)
Total net amount
8,167
\u2013
8,167
9,020
29
9,049
1. \u00a31,722m assets of operations classified as held for sale measured under amortised cost with \u00a31m ECL.
Other financial assets at amortised cost are predominantly unrated other receivables with an immaterial loss allowance
(2024:\u00a0immaterial\u00a0loss\u00a0allowance).
Offsetting
Financial assets and liabilities are offset in the Consolidated Balance Sheet when the Group has a legally enforceable right to offset and has
the intention to settle the asset and liability on a net basis, or to realise the asset and liability simultaneously.
The Group has not entered into any financial transactions resulting in financial assets and liabilities being offset in the Consolidated Balance
Sheet. The table below shows the financial assets and liabilities that are subject to master netting agreements in shareholder assets and
liabilities. Unit linked assets and liabilities have not been included as shareholders are not exposed to the risks on these policies.
Amounts subject to enforceable netting arrangements
Amounts under master netting arrangements but not offset
Gross and net
amounts reported
in the Consolidated
Balance Sheet
Related financial
instruments 1
Cash collaternal2
Securities
collateral
pledged 2
Net amount
As at 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Derivative assets
41,625
(40,202)
(187)
(1,236)
\u2013
Reverse repurchase agreements
1,060
\u2013
\u2013
(1,060)
\u2013
Total
42,685
(40,202)
(187)
(2,296)
\u2013
Derivative liabilities
(49,451)
40,202
1,477
7,772
\u2013
Repurchase agreement
(1,654)
\u2013
\u2013
1,654
\u2013
Total
(51,105)
40,202
1,477
9,426
\u2013
Amounts subject to enforceable netting arrangements
Amounts under master netting arrangements but not offset
Gross and net
amounts reported
in the Consolidated
Balance Sheet
Related financial
instruments 1
Cash collaternal2
Securities
collateral
pledged2
Net amount
As at 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Derivative assets
49,195
(48,433)
(85)
(677)
\u2013
Reverse repurchase agreements
2,630
\u2013
\u2013
(2,630)
\u2013
Total
51,825
(48,433)
(85)
(3,307)
\u2013
Derivative liabilities
(54,274)
48,433
630
5,211
\u2013
Repurchase agreement
(2,488)
\u2013
\u2013
2,488
\u2013
Total
(56,762)
48,433
630
7,699
\u2013
1. Related financial instruments represents outstanding amounts with the same counterparty which, under agreements such as the ISDA Master Agreement, could be offset and\u00a0settled
net following certain predetermined events.
2. Cash and securities held may exceed target levels due to the complexities of operational collateral management, timing and agreements in place with individual counterparties.
In the tables above, the amounts of assets or liabilities presented in the Consolidated Balance Sheet are offset first by financial instruments that
have the right of offset under master netting or similar arrangements with any remaining amount reduced by cash and securities collateral.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-659": { "value": "
Liquidity risk
The risk that the Group, though solvent, either does not have sufficient liquid financial resources available to enable it to meet its obligations
as they fall due, or can secure them only at excessive cost.
The Group is also exposed to insurance risk as a consequence of offering these products \u2013 more detail on insurance risk can be found
in\u00a0Note\u00a019.
The Group is not directly exposed to any market risk, credit risk or liquidity risk associated with Asset Management\u2019s client funds and as
a\u00a0result, the detailed risk disclosures have not been presented. However, Asset Management\u2019s income from client funds is related to the
value\u00a0of funds under management and so they are indirectly exposed to market risks that impact the value of assets underlying those funds.
Liquidity risk
Principal risks
Segment
Controls to mitigate risks
Contingent event risk
Events that result in liquidity risk include a pandemic that
could lead to significantly higher levels of claims than
would normally be expected, or extreme events
impacting the timing of cash flows or the ability to
realise investments at\u00a0a\u00a0given value within a specified
timeframe.
Group, Corporate
Investments and Retail
The Group seeks to ensure that it meets its obligations as they fall due
and avoids incurring material losses on forced asset sales in order to meet
those obligations. A limited level of contingent liquidity risk is, however,
an accepted element of writing insurance contracts. It is furthermore a
consequence of the\u00a0markets in which the Group operates and the
execution of investment management strategies. However, the Group\u2019s
insurance businesses seek to\u00a0maintain sufficient liquid assets and standby
facilities to meet a prudent estimate of the cash outflows that may arise
from contingent events. The\u00a0level\u00a0of required liquidity is identified using
techniques including stress tests for\u00a0shock events and the profile of actual
liquid assets is regularly compared to the required liability profile. The
Group\u2019s treasury function provides\u00a0formal facilities to other areas of the
Group to cover contingent liquidity requirements arising from more
extreme events and where investment\u00a0assets may not be readily
realisable.
The Group holds certain non-core assets in its Corporate Investments unit
which are available for disposal. Our principal mitigation against timing or
valuation risk on these assets is that we are not a forced seller \u2013 we have
sufficient pools of liquidity and available actions across the Group which
can\u00a0be deployed to manage these risks.
Collateral liquidity risk
Within the annuities business, the use of financial
instruments to\u00a0hedge default, interest rate, currency and
inflation risks can\u00a0require the posting of collateral with
counterparties at\u00a0short\u00a0notice.
Asset Management,
Institutional Retirement
and Retail
The Group seeks to manage the risk of collateral calls by maintaining a
pool of assets which are eligible to be posted under its various collateral
arrangements. The collateral pool is sized to be able to withstand a range
of severe but plausible stresses, plus an additional risk-buffer for
prudence. The Group also maintains a series of management actions to
mitigate against highly-severe shocks.
Investment liquidity risk
Direct lending, sale and leaseback investments and
lifetime mortgage business are inherently illiquid forms
of investment, with limited secondary markets to realise
the\u00a0value of assets outside agreed redemption terms.
Asset Management,
Institutional Retirement
and Retail
Given the illiquid nature of the annuity and other liabilities the Group is
able and willing to take advantage of the premium offered by illiquid
assets. The Group, however, sets limits on the overall exposure to illiquid
investments taking account of the nature and type of liabilities that the
assets are held to meet.
As at 31 December 2025, the Group had \u00a32,901m (2024: \u00a33,757m) of cash and cash equivalents in shareholder funds and a \u00a31.5bn
syndicated committed revolving credit facility in place, provided by a number of its key relationship banks, maturing in August 2029.
", "dimensions": { "concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-660": { "value": "
10. Balance sheet analysis
The Group has categorised its assets and liabilities in the following disclosure in accordance with the level of shareholder exposure to
market and\u00a0credit risks. Various reinsurance and hedging arrangements are in place as mechanisms to mitigate the risks.
The two categorisations presented are:
Unit linked
For unit linked contracts, there is a direct link between the investments and the obligations. Unit linked business is written in both Legal and
General Assurance Society Limited and Legal and General Assurance (Pensions Management) Limited. The financial risk on these contracts
is\u00a0borne by the policyholders. The Group is therefore not directly exposed to any market risk, currency risk or credit risk for these contracts.
As\u00a0a\u00a0result, risk disclosures have not been presented for unit linked assets and liabilities.
Shareholder
All non-unit linked assets are classified as shareholder assets. Shareholders of the Group are directly exposed to market and credit risk on
these assets, including those backing the non-unit linked business.
The table below presents an analysis of the balance sheet by category. The quantitative risk disclosures in Notes 17 and 18 have been
provided using this categorisation.
Shareholder
Unit linked
Total
As at 31 December 2025
\u00a3m
\u00a3m
\u00a3m
Assets
Goodwill and intangible assets
395
\u2013
395
Investment in associates and joint ventures accounted for using the equity method
434
76
510
Property, plant and equipment
213
119
332
Investments1
142,446
408,065
550,511
Reinsurance contract assets
8,840
\u2013
8,840
Other assets
5,484
3,296
8,780
Assets of operations classified as held for sale
12,900
\u2013
12,900
Total assets
170,712
411,556
582,268
Liabilities
Contract liabilities
95,095
356,808
451,903
Core borrowings
4,353
(56)
4,297
Operational borrowings
292
309
601
Other liabilities
56,291
54,502
110,793
Liabilities of operations classified as held for sale
12,362
\u2013
12,362
Total liabilities
168,393
411,563
579,956
Shareholder
Unit linked
Total
As at 31 December 2024
\u00a3m
\u00a3m
\u00a3m
Assets
Goodwill and intangible assets
480
\u2013
480
Investment in associates and joint ventures accounted for using the equity method
795
77
872
Property, plant and equipment
276
119
395
Investments1
151,741
370,289
522,030
Reinsurance contract assets
9,165
\u2013
9,165
Other assets
5,878
5,347
11,225
Total assets
168,335
375,832
544,167
Liabilities
Contract liabilities
97,061
322,714
419,775
Core borrowings
4,397
(89)
4,308
Operational borrowings
1,734
1,657
3,391
Other liabilities
61,650
51,532
113,182
Total liabilities
164,842
375,814
540,656
1. Investments includes financial investments, investment property and cash and cash equivalents.
", "dimensions": { "concept": "legalandgeneral:DisclosureOfBalanceSheetAnalaysis", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-662": { "value": "
11. Intangible assets
Intangible assets mainly consist of capitalised software costs and intangible assets acquired as part of a business combination
(customer relationships and brand). Amortisation charges and any impairments are recognised in the Consolidated Income
Statement in Other expenses (see Note 5).
Capitalised
software costs 1
Other intangible
assets
Total
2025
2025
2025
\u00a3m
\u00a3m
\u00a3m
Cost
As at 1 January
642
\u2013
642
Transfer to held for sale
(82)
\u2013
(82)
Additions
19
\u2013
19
Disposals
(9)
\u2013
(9)
Decrease due to currency translation
(1)
\u2013
(1)
As at 31 December
569
\u2013
569
Accumulated amortisation and impairment
As at 1 January
(192)
\u2013
(192)
Transfer to held for sale
12
\u2013
12
Amortisation for the year
(55)
\u2013
(55)
Impairment
(2)
\u2013
(2)
Disposals
9
\u2013
9
As at 31 December
(228)
\u2013
(228)
Total net book value as at 31 December
341
\u2013
341
To be amortised within 12 months
50
To be amortised after 12 months
291
Capitalised
software costs 1
Other intangible
assets
Total
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
Cost
As at 1 January
593
36
629
Additions
53
\u2013
53
Disposals
(6)
(25)
(31)
Increase due to currency translation
2
\u2013
2
Other movements 2
\u2013
(11)
(11)
As at 31 December
642
\u2013
642
Accumulated amortisation and impairment
As at 1 January
(142)
(10)
(152)
Amortisation for the year
(56)
\u2013
(56)
Impairment
\u2013
\u2013
\u2013
Disposals
6
\u2013
6
Other movements 2
\u2013
10
10
As at 31 December
(192)
\u2013
(192)
Total net book value as at 31 December
450
\u2013
450
To be amortised within 12 months
47
To be amortised after 12 months
403
1. Total capitalised software costs include \u00a343m of work in progress assets that were not yet available for use as at 31 December 2025 (31 December 2024: \u00a3213m).
2. Other movements primarily reflect the removal of fully amortised assets that are no longer in use.", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-661": { "value": "
11. Intangible assets
Intangible assets mainly consist of capitalised software costs and intangible assets acquired as part of a business combination
(customer relationships and brand). Amortisation charges and any impairments are recognised in the Consolidated Income
Statement in Other expenses (see Note 5).
Capitalised
software costs 1
Other intangible
assets
Total
2025
2025
2025
\u00a3m
\u00a3m
\u00a3m
Cost
As at 1 January
642
\u2013
642
Transfer to held for sale
(82)
\u2013
(82)
Additions
19
\u2013
19
Disposals
(9)
\u2013
(9)
Decrease due to currency translation
(1)
\u2013
(1)
As at 31 December
569
\u2013
569
Accumulated amortisation and impairment
As at 1 January
(192)
\u2013
(192)
Transfer to held for sale
12
\u2013
12
Amortisation for the year
(55)
\u2013
(55)
Impairment
(2)
\u2013
(2)
Disposals
9
\u2013
9
As at 31 December
(228)
\u2013
(228)
Total net book value as at 31 December
341
\u2013
341
To be amortised within 12 months
50
To be amortised after 12 months
291
Capitalised
software costs 1
Other intangible
assets
Total
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
Cost
As at 1 January
593
36
629
Additions
53
\u2013
53
Disposals
(6)
(25)
(31)
Increase due to currency translation
2
\u2013
2
Other movements 2
\u2013
(11)
(11)
As at 31 December
642
\u2013
642
Accumulated amortisation and impairment
As at 1 January
(142)
(10)
(152)
Amortisation for the year
(56)
\u2013
(56)
Impairment
\u2013
\u2013
\u2013
Disposals
6
\u2013
6
Other movements 2
\u2013
10
10
As at 31 December
(192)
\u2013
(192)
Total net book value as at 31 December
450
\u2013
450
To be amortised within 12 months
47
To be amortised after 12 months
403
1. Total capitalised software costs include \u00a343m of work in progress assets that were not yet available for use as at 31 December 2025 (31 December 2024: \u00a3213m).
2. Other movements primarily reflect the removal of fully amortised assets that are no longer in use.", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-663": { "value": "
12. Property, plant and equipment
Right-of-use
Owned
Office buildings
IT
Other1
Other2
Total
2025
2025
2025
2025
2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Cost/Valuation
As at 1 January
205
35
7
403
650
Transfer to held for sale
(51)
\u2013
\u2013
(12)
(63)
Additions
3
\u2013
\u2013
19
22
Disposals
(30)
\u2013
(2)
(18)
(50)
Decrease due to currency translation
(1)
\u2013
\u2013
(1)
(2)
Other
1
\u2013
\u2013
\u2013
1
As at 31 December
127
35
5
391
558
Accumulated depreciation and impairment
As at 1 January
(120)
(11)
(4)
(120)
(255)
Transfer to held for sale
15
\u2013
\u2013
9
24
Depreciation for the year
(13)
(8)
\u2013
(23)
(44)
Impairment
\u2013
\u2013
\u2013
\u2013
\u2013
Disposals
30
\u2013
1
17
48
Decrease due to currency translation
\u2013
\u2013
\u2013
1
1
As at 31 December
(88)
(19)
(3)
(116)
(226)
Total net book value as at 31 December
39
16
2
275
332
Right-of-use
Owned
Office buildings
IT
Other1
Other2
Total
2024
2024
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Cost/Valuation
As at 1 January
215
35
9
422
681
Additions
11
\u2013
\u2013
31
42
Disposals
(23)
\u2013
(2)
(51)
(76)
Increase due to currency translation
1
\u2013
\u2013
\u2013
1
Other
1
\u2013
\u2013
1
2
As at 31 December
205
35
7
403
650
Accumulated depreciation and impairment
As at 1 January
(115)
(5)
(4)
(124)
(248)
Depreciation for the year
(18)
(6)
(2)
(23)
(49)
Impairment
\u2013
\u2013
\u2013
(14)
(14)
Disposals
13
\u2013
2
41
56
As at 31 December
(120)
(11)
(4)
(120)
(255)
Total net book value as at 31 December
85
24
3
283
395
1. Other right-of-use assets comprise land leases and vehicles.
2. Other owned assets predominantly include land, buildings and IT, as well as owner-occupied property with a carrying value of \u00a348m as at 31 December 2025 ( 2024: \u00a347m) held\u00a0under
the fair value model.
", "dimensions": { "concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-667": { "value": "
13. Financial investments and investment property
Shareholder
Unit linked
Total
2025
2025
2025
Financial investments at fair value classified as:
Note
\u00a3m
\u00a3m
\u00a3m
Fair value through profit or loss1
79,987
380,470
460,457
Fair value through other comprehensive income
1,857
\u2013
1,857
Fair value through profit or loss - derivatives1
41,625
2,704
44,329
Loans at fair value through profit or loss 1
1,070
5,897
6,967
Financial investments at fair value
13(i)
124,539
389,071
513,610
Debt securities at amortised cost
7,973
\u2013
7,973
Loans at amortised cost
194
\u2013
194
Total financial investments
132,706
389,071
521,777
Investment property
6,839
4,797
11,636
Total financial investments and investment property
139,545
393,868
533,413
Expected to be recovered within 12 months
39,173
Expected to be recovered after 12 months
494,240
Shareholder
Unit linked
Total
2024
2024
2024
Financial investments at fair value classified as:
Note
\u00a3m
\u00a3m
\u00a3m
Fair value through profit or loss1
79,233
346,753
425,986
Fair value through other comprehensive income
1,922
\u2013
1,922
Fair value through profit or loss - derivatives1
49,195
1,997
51,192
Loans at fair value through profit or loss 1
2,630
4,772
7,402
Financial investments at fair value
13(i)
132,980
353,522
486,502
Debt securities at amortised cost
8,965
\u2013
8,965
Loans at amortised cost
84
\u2013
84
Total financial investments
142,029
353,522
495,551
Investment property
5,955
3,867
9,822
Total financial investments and investment property
147,984
357,389
505,373
Expected to be recovered within 12 months
36,632
Expected to be recovered after 12 months
468,741
1. Mandatorily measured at fair value through profit or loss.
Investment risks on unit linked assets are borne by the policyholders. The remaining risks associated with financial investments are outlined
in\u00a0Note 9.
Financial investments and Cash and cash equivalents (Note 16) together include:
\u2022 \u00a32,670m (2024: \u00a32,755m) of assets pledged as collateral against net derivative liability counterparty positions. The assets used as
collateral are Treasury Gilts, Foreign Government Bonds, AAA, AA, A and BBB Corporate Bonds and Cash ( 2024: Treasury Gilts, Foreign
Government Bonds, AAA, AA, A and BBB Corporate Bonds and Cash) having a residual maturity of over 79 years ( 2024: over 32 years).
\u2022 \u00a34,541m (2024: \u00a35,377m) of assets pledged as collateral in relation to various pension risk transfer deals. The assets used as collateral
are\u00a0Treasury Gilts, AAA to BBB Corporate Bonds and Cash (2024: Treasury Gilts, AAA to BBB Corporate Bonds and Cash) having a
residual maturity of over 44 years (2024: over 45 years).
\u2022 \u00a3839m (2024: \u00a3904m) of assets pledged in respect of longevity swaps with reinsurance counterparties. The assets used as collateral are
Treasury Gilts and AAA to AA Corporate Bonds (2024: Treasury Gilts, AAA to AA Corporate Bonds) having a residual maturity of over
61 years (2024: over 61 years).
While pledged as collateral, the Group is entitled to receive all of the cash flows from the assets above and there is no obligation to pay or
transfer cash flows arising from them to another entity. These assets are neither past due, nor impaired. The carrying value reflects the full
exposure of these assets.
The Group is permitted to sell or repledge collateral as per the International Swap Dealers Association agreements in place, including where
there has been no default by the owner of the collateral. As at 31 December 2025, the Group had repledged cash collateral with a fair value of
\u00a3447m (2024: \u00a3704m) in order to fulfil other collateral requirements in relation to derivatives contracts. The counterparties have an obligation
to return the\u00a0cash collateral to the Group. There are no other significant terms and conditions associated with the use of this cash collateral.
Financial investments include \u00a320,216m (2024: \u00a322,117m) of assets that have been sold but not derecognised and are subject to repurchase
agreements. Risks and rewards of these assets have been retained within the Group. The related obligation to repurchase the financial
assets is included within Payables and other financial liabilities (Note 26).
Financial investments have been allocated between those expected to be settled within 12 months and after 12 months in line with the
expected settlement of the backed liabilities. Assets in excess of the insurance and investment contract liabilities have been classified as
expected to be settled after 12 months.
(i) Financial investments and investment property at fair value
Shareholder
Unit linked
Total
2025
2025
2025
Notes
\u00a3m
\u00a3m
\u00a3m
Equity securities
2,072
232,472
234,544
Debt securities
79,772
147,998
227,770
Derivative assets
14
41,625
2,704
44,329
Loans at fair value
13(ii)
1,070
5,897
6,967
Financial investments
124,539
389,071
513,610
Investment property
6,839
4,797
11,636
Total financial investments at fair value
131,378
393,868
525,246
Shareholder
Unit linked
Total
2024
2024
2024
Notes
\u00a3m
\u00a3m
\u00a3m
Equity securities
2,948
198,342
201,290
Debt securities
78,207
148,411
226,618
Derivative assets
14
49,195
1,997
51,192
Loans at fair value
13(ii)
2,630
4,772
7,402
Financial investments
132,980
353,522
486,502
Investment property
5,955
3,867
9,822
Total financial investments at fair value
138,935
357,389
496,324
Included within unit linked equity securities are \u00a3109m (2024: \u00a3121m) of debt instruments which incorporate an embedded derivative linked
to the value of the Group\u2019s share price.
(ii) Fair value hierarchy
The table below breaks down the fair value of financial investments and investment property by fair value hierarchy level.
Total
Level 1
Level 2
Level 3
As at 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Shareholder
Equity securities
2,072
538
\u2013
1,534
Debt securities
79,772
43,247
16,425
20,100
Derivative assets
41,625
1
41,624
\u2013
Loans at fair value
1,070
\u2013
1,070
\u2013
Investment property
6,839
\u2013
\u2013
6,839
Total Shareholder
131,378
43,786
59,119
28,473
Unit linked
Equity securities
232,472
229,627
3
2,842
Debt securities
147,998
102,976
42,920
2,102
Derivative assets
2,704
43
2,661
\u2013
Loans at fair value
5,897
\u2013
5,897
\u2013
Investment property
4,797
\u2013
\u2013
4,797
Total Unit linked
393,868
332,646
51,481
9,741
Total financial investments and investment property at fair value
525,246
376,432
110,600
38,214
Debt securities at amortised cost1
6,930
\u2013
43
6,887
Loans at amortised cost 1
194
1
\u2013
193
1. This table includes debt securities and loans which are held at amortised cost on the Consolidated Balance Sheet at a total value of \u00a38,167m.
Total
Level 1
Level 2
Level 3
As at 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Shareholder
Equity securities
2,948
960
170
1,818
Debt securities
78,207
31,714
25,424
21,069
Derivative assets
49,195
7
49,188
\u2013
Loans at fair value
2,630
\u2013
2,630
\u2013
Investment property
5,955
\u2013
\u2013
5,955
Total Shareholder
138,935
32,681
77,412
28,842
Unit linked
Equity securities
198,342
197,532
1
809
Debt securities
148,411
97,799
49,269
1,343
Derivative assets
1,997
84
1,913
\u2013
Loans at fair value
4,772
\u2013
4,772
\u2013
Investment property
3,867
\u2013
\u2013
3,867
Total Unit Linked
357,389
295,415
55,955
6,019
Total financial investments and investment property at fair value
496,324
328,096
133,367
34,861
Debt securities at amortised cost1
7,847
\u2013
43
7,804
Loans at amortised cost 1
84
1
\u2013
83
1. This table includes debt securities and loans which are held at amortised cost on the Consolidated Balance Sheet at a total value of \u00a3 9,049m.
The levels of fair value measurement bases are defined as follows:
\u2022 Level 1: fair values measured using quoted prices (unadjusted) in active markets for identical assets or liabilities.
\u2022 Level 2: fair values measured using valuation techniques for all inputs significant to the measurement other than quoted prices included
within\u00a0Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
\u2022 Level 3: fair values measured using valuation techniques for any input for the asset or liability significant to the measurement that is not
based on\u00a0observable market data (unobservable inputs).
(a) Level 2 assets measured at fair value
All of the Group\u2019s Level 2 assets have been valued using standard market pricing sources, such as IHS Markit, ICE and Bloomberg, or Index
Providers such as Barclays, Merrill Lynch or JPMorgan. Each uses mathematical modelling and multiple source validation in order to
determine consensus prices, with the exception of OTC Derivative holdings; OTCs are marked to market using an in-house system (Lombard
Oberon), external vendor (IHS Markit), internal model or Counterparty Broker marks. In normal market conditions, we would consider these
market prices\u00a0to\u00a0be observable market prices. Following consultation with our pricing providers and a number of their contributing brokers,
we have considered that these prices are not from a suitably active market and have therefore classified them as Level 2.
The Group\u2019s policy is to re-assess categorisation of financial assets at the end of each reporting period and to recognise transfers between
levels\u00a0at that point in time. At 31 December 2025 debt securities totalling net \u00a310bn (2024: \u00a314bn) transferred from Level 2 to Level 1 in
the fair\u00a0value hierarchy.
(b) Level 3 assets measured at fair value
Level 3 assets, where modelling techniques are used, comprise property, unquoted securities, untraded debt securities and securities
where unquoted prices are provided by a single broker. Unquoted securities include suspended securities, investments in private equity
and property vehicles. Untraded debt securities include private placements, commercial real estate loans, income strips, retirement interest
only and other lifetime mortgages.
In many situations, inputs used to measure the fair value of an asset or liability may fall into different levels of the fair value hierarchy.
In\u00a0these situations, the Group determines the level in which the fair value falls based upon the lowest level input that is significant to
the\u00a0determination of\u00a0the fair value. As a result, both observable and unobservable inputs may be used in the determination of fair values
that\u00a0the Group has classified\u00a0within Level 3.
The Group determines the fair values of certain financial assets and liabilities based on quoted market prices, where available. The Group
also determines fair value based on estimated future cash flows discounted at the appropriate current market rate. As appropriate, fair
values reflect adjustments for counterparty credit quality, the Group\u2019s credit standing, liquidity and risk margins on unobservable inputs.
Fair values are subject to a control framework designed to ensure that input variables and outputs are assessed independent of the risk
taker. These inputs and outputs are reviewed and approved by a valuation committee and validated independently as appropriate.
Equity
securities
Other
financial
investments
Investment
property
Total
Equity
securities
Other
financial
investments
Investment
property
Total
2025
2025
2025
2025
2024
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
As at 1 January
2,627
22,412
9,822
34,861
2,392
20,463
8,893
31,748
Transfer to held for sale
(89)
(3,024)
\u2013
(3,113)
\u2013
\u2013
\u2013
\u2013
Total gains/(losses) for the year:
Realised gains or (losses) 1
4
(11)
(64)
(71)
4
(17)
(2)
(15)
Unrealised gains or (losses) 1
(109)
66
156
113
(208)
(278)
(20)
(506)
Purchases/Additions
2,295
5,581
2,007
9,883
789
5,649
1,502
7,940
Sales/Disposals
(301)
(3,098)
(264)
(3,663)
(364)
(3,369)
(552)
(4,285)
Transfers into Level 3
48
320
\u2013
368
\u2013
70
\u2013
70
Transfers out of Level 3
(92)
(36)
\u2013
(128)
\u2013
(144)
\u2013
(144)
Foreign exchange rate movements
(7)
(8)
(21)
(36)
14
38
1
53
As at 31 December
4,376
22,202
11,636
38,214
2,627
22,412
9,822
34,861
1. Realised and unrealised gains/(losses) are recognised in Investment return in the Consolidated Income Statement.
The breakdown below includes assets which are disclosed in Assets of operations classified as held for sale in the Consolidated Balance
Sheet where applicable.
Equity securities
Level 3 equity securities amount to \u00a34,487m (2024: \u00a32,627m), of which the majority is made up of holdings in investment property vehicles
and\u00a0private investment funds. They are valued at the proportion of the Group\u2019s holding of the Net Asset Value reported by the investment
vehicles.\u00a0Other equity securities are valued by a number of third-party specialists using a range of techniques which are often dependent on
the\u00a0maturity of\u00a0the underlying investment but can also depend on the characteristics of individual assets. Such techniques include transaction
values underpinned by analysis of milestone achievement and cash runway for early/start-up stage investments, discounted cash flow
models for\u00a0investments at the next stage of development and earnings multiples for more mature investments.
Other financial investments
Lifetime mortgage (LTM) loans and retirement interest only mortgages amount to \u00a35,756m (2024: \u00a35,861m). Lifetime mortgages are valued
using a discounted cash flow model by projecting best estimate net asset proceeds and discounted using rates inferred from current LTM
loan pricing. The inferred illiquidity premiums for the majority of the portfolio range between 150 and 250bps. (2024: between 150 and
250bps). This\u00a0ensures the value of loans at outset is consistent with the purchase price of the loan and achieves consistency between new
and in-force loans. Lifetime mortgages include a no negative equity guarantee (NNEG) to borrowers. This ensures that if there is a shortfall
between the\u00a0sale proceeds of the property and the outstanding loan balance on redemption of the loan, the value of the loan will be reduced
by this amount. The NNEG on loan redemption is valued as a series of put\u00a0options, which we calculate using a variant of the Black-Scholes
formula. Key assumptions in the valuation of lifetime mortgages include short-term and long-term property growth rates, property index
volatility, voluntary early repayments and longevity assumptions. The valuation as\u00a0at 31 December 2025 reflects a combination of short-
term and long-term property growth rate assumptions equivalent to a flat rate of 3.5% annually (2024: 3.4% annually), after allowing for
the effects of dilapidation. The values of the properties collateralising the LTM loans are updated from the date of the last property valuation
to the valuation date by indexing using UK regional house price indices.
Private credit loans (including commercial real estate loans) amount to \u00a314,511m (2024: \u00a311,779m). Their valuation is determined by
discounted future cash flows which are based on the market yield and spread of the Asset Management approved comparable bonds
and the initial transaction spread, both of which are agreed by S&P Global who also provide an independent verification of the selection of
the comparable bonds. Unobservable inputs that go into the determination of\u00a0comparators include rating, sector, sub-sector, performance
dynamics, financing structure and duration of investment. Existing private credit investments, which were executed as far back as 2011, are
subject to a range of interest rate formats, although the majority are fixed rate. The weighted average duration of the portfolio is 7.0 years
(2024: 7.6 years), with a weighted average life of 10.0 years (2024: 11.0 years). Maturities in the portfolio currently extend out\u00a0to\u00a02074
(2024: to 2074). The private credit portfolio of assets has internal ratings assigned by an independent credit team in line with internally
developed methodologies. These credit ratings range from AAA to BB- (2024: AAA to BB-).
Private placements, all of which relate to held for sale assets, amount to \u00a32,579m (2024: \u00a32,181m). They are valued using a pricing matrix
comprised of a public spread matrix, internal ratings assigned to each holding, average life of each holding and a premium spread matrix. These
are added to the risk-free rate to calculate the discounted cash flows and establish a market value for each investment grade private placement.
Income strip assets amount to \u00a31,272m (2024: \u00a31,280m). Their valuation is outsourced to CBRE who apply a yield to maturity to\u00a0discounted
future cash flows to derive valuations. The overall valuation takes into account the property location, tenant details, tenure, rent, rental break
terms, lease expiries and underlying residual value of the property. The valuation as at 31 December 2025 reflects equivalent yield ranges
between 3% and 18% (2024: between 2% to 17%) and estimated rental values (ERV) between \u00a31 and \u00a326 per sq.ft
(2024: between \u00a37 and \u00a3367 per sq.ft).
Commercial mortgage loans, all of which relate to held for sale assets, amount to \u00a3795m (2024: \u00a3843m) and are determined by incorporating
credit risk for performing loans at the portfolio level and adjusted for loans identified to be distressed at the loan level. The projected cash flows
of each loan are discounted along stochastic risk-free rate paths and are inclusive of an Option Adjusted Spread (OAS), derived from current
internal pricing on new loans, along with\u00a0the best observable inputs.
Other debt securities which are not traded in an active market amount to \u00a3663m (2024: \u00a3468m). They have been valued using third-party
or\u00a0counterparty valuations and these prices are considered to be unobservable due to infrequent market transactions.
Investment property
Level 3 investment property amounting to \u00a311,636m (2024: \u00a39,822m) is valued with the involvement of external valuers. All property
valuations in\u00a0the UK are carried out in accordance with the latest edition of the Valuation Standards published by the Royal Institute of
Chartered Surveyors and are undertaken by appropriately qualified valuers as defined therein. Outside the UK, valuations are produced in
conjunction with external qualified professional values in the countries concerned. Whilst transaction evidence underpins the valuation
process, the definition of market value, including the commentary, in practice requires the valuer to reflect the realities of the current market.
In this context, valuers must use their market\u00a0knowledge and professional judgement and not rely only upon market sentiment based on
historic transactional comparables.
The valuation of investment properties also includes an income approach that is based on current rental income plus anticipated uplifts,
where\u00a0the uplift and discount rates are derived from rates implied by recent market transactions. These inputs are deemed unobservable.
The\u00a0valuation as at 31 December 2025 reflects equivalent yield ranges between 1% and 53% (2024: between 1% and 53%) and Estimated
Rental Value (ERV) between \u00a31 and \u00a3219 per sq.ft (2024: between \u00a32 and \u00a3369 per sq.ft).
The table below shows the valuation of investment property by sector:
2025
2024
\u00a3m
\u00a3m
Retail
1,351
1,242
Leisure
580
493
Distribution
1,279
1,058
Office Space
3,267
2,876
Industrial and other commercial
2,306
1,805
Accommodation
2,853
2,348
Total investment property
11,636
9,822
c) Effect of changes in assumptions on Level 3 assets
Fair values of financial instruments are, in certain circumstances, measured using valuation techniques that incorporate assumptions that are
not\u00a0evidenced by prices from observable current market transactions in the same instrument and are not based on observable market data.
Where material, the Group assesses the sensitivity of fair values of Level 3 investments to changes in unobservable inputs to reasonable
alternative assumptions. The table below shows the impact of applying these sensitivities to the fair value of Level 3 assets as at
31 December 2025, including assets which are part of operations classified as held for sale. Further disclosure on how these sensitivities
have been applied can be found in the descriptions following the table.
Sensitivities
Fair value 2025
Positive impact
Negative impact
\u00a3m
\u00a3m
\u00a3m
Lifetime mortgages
5,756
204
(246)
Private credit portfolios
17,885
756
(756)
Investment property
11,636
943
(926)
Other investments1
6,422
396
(479)
Total Level 3 assets
41,699
2,299
(2,407)
1. Other investments include Level 3 equity securities, income strip assets and other traded debt securities which are Level 3.
The sensitivities are not a function of sensitising a single variable relating to the valuation of the asset, but rather a function of flexing
multiple factors often at individual asset level. The following sets out a number of key factors by asset type and how they have been
flexed to derive reasonable alternative valuations.
Lifetime mortgages
Key assumptions used in the valuation of lifetime mortgage assets are listed in Note 13(ii)(b) and sensitivities are applied to each assumption
which are used to derive the values in the above table. The most significant increase in value is a 20bps reduction in the discount rate which,
applied in isolation produces a sensitised value of \u00a3134m. The most significant decrease in value is a 20bps increase in the discount rate
which, applied in isolation produces a sensitised value of \u00a3(130)m.
Private credit portfolios
The sensitivity in the private credit portfolio has been determined through a method which estimates investment spread value premium
differences as compared to the institutional investment market. Individual investment characteristics of each holding, such as credit rating
and duration are used to determine spread differentials for the purposes of determining alternate values. Spread differentials are determined
to be lower for highly rated and/or shorter duration assets as compared to lower rated and/or longer duration assets. A significant component of
the spread differential is in relation to the selection of comparator bonds, which is the potential difference in spread of the basket of relevant
comparators determined by respective investors. If we were to take an AA rated asset it may attract a spread differential of 30bps on the
selection of comparator bonds as opposed to 45bps for a similar duration BBB rated asset. Applied in isolation the sensitivity used to reflect
the spread in comparator bond selection results in sensitised values of \u00a3260m and \u00a3(260)m.
Investment property
Investment property holdings are valued by independent valuers on the basis of open market value as defined in the appraisal and valuation
manual of the Royal Institute of Chartered Surveyors (RICS). As such, sensitivities are calculated through a mixture of asset level and portfolio
level methodologies which make reference to individual investment characteristics of the holding but do not flex individual assumptions
used by the independent expert in valuing the holdings. Valuation uncertainty is assessed using three methodologies that are each applied
independently and then weighted equally to determine the overall portfolio sensitivity: (i) acceptable margin of error approach reflecting
real asset valuation specialists view on uncertainty, (ii) an fixed income approach that derives sensitivities for each asset using duration,
credit rating and inflation linkage to determine asset\u2011specific stress factors and (iii) a property yield approach that flexes valuation yields by
reference to remaining term and credit rating (for example, AA rated asset with remaining term of 25 years in normal market conditions this
would lead to a 15bps yield flex as opposed to a 35bps yield flex for a BBB rated asset with a 30 year remaining term). While these three
methodologies are combined to produce a weighted average sensitivity on Sales and Leaseback and Build to Rent portfolio. Other portfolios
apply margin of error sensitivity.
The methodology which leads to the most significant sensitivity at the balance sheet date is an acceptable margin of error reflecting real
asset valuation specialists view on uncertainty of 10% either way, subject to the valuation being undertaken with due care. If this sensitivity
were to be taken without a weighting it would produce sensitised values of \u00a3587m and \u00a3(587)m.
It should be noted that some sensitivities described above are non-linear and larger or smaller impacts should not be interpolated or
extrapolated from these results.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsDesignatedAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-666": { "value": "
13. Financial investments and investment property
Shareholder
Unit linked
Total
2025
2025
2025
Financial investments at fair value classified as:
Note
\u00a3m
\u00a3m
\u00a3m
Fair value through profit or loss1
79,987
380,470
460,457
Fair value through other comprehensive income
1,857
\u2013
1,857
Fair value through profit or loss - derivatives1
41,625
2,704
44,329
Loans at fair value through profit or loss 1
1,070
5,897
6,967
Financial investments at fair value
13(i)
124,539
389,071
513,610
Debt securities at amortised cost
7,973
\u2013
7,973
Loans at amortised cost
194
\u2013
194
Total financial investments
132,706
389,071
521,777
Investment property
6,839
4,797
11,636
Total financial investments and investment property
139,545
393,868
533,413
Expected to be recovered within 12 months
39,173
Expected to be recovered after 12 months
494,240
Shareholder
Unit linked
Total
2024
2024
2024
Financial investments at fair value classified as:
Note
\u00a3m
\u00a3m
\u00a3m
Fair value through profit or loss1
79,233
346,753
425,986
Fair value through other comprehensive income
1,922
\u2013
1,922
Fair value through profit or loss - derivatives1
49,195
1,997
51,192
Loans at fair value through profit or loss 1
2,630
4,772
7,402
Financial investments at fair value
13(i)
132,980
353,522
486,502
Debt securities at amortised cost
8,965
\u2013
8,965
Loans at amortised cost
84
\u2013
84
Total financial investments
142,029
353,522
495,551
Investment property
5,955
3,867
9,822
Total financial investments and investment property
147,984
357,389
505,373
Expected to be recovered within 12 months
36,632
Expected to be recovered after 12 months
468,741
1. Mandatorily measured at fair value through profit or loss.
Investment risks on unit linked assets are borne by the policyholders. The remaining risks associated with financial investments are outlined
in\u00a0Note 9.
Financial investments and Cash and cash equivalents (Note 16) together include:
\u2022 \u00a32,670m (2024: \u00a32,755m) of assets pledged as collateral against net derivative liability counterparty positions. The assets used as
collateral are Treasury Gilts, Foreign Government Bonds, AAA, AA, A and BBB Corporate Bonds and Cash ( 2024: Treasury Gilts, Foreign
Government Bonds, AAA, AA, A and BBB Corporate Bonds and Cash) having a residual maturity of over 79 years ( 2024: over 32 years).
\u2022 \u00a34,541m (2024: \u00a35,377m) of assets pledged as collateral in relation to various pension risk transfer deals. The assets used as collateral
are\u00a0Treasury Gilts, AAA to BBB Corporate Bonds and Cash (2024: Treasury Gilts, AAA to BBB Corporate Bonds and Cash) having a
residual maturity of over 44 years (2024: over 45 years).
\u2022 \u00a3839m (2024: \u00a3904m) of assets pledged in respect of longevity swaps with reinsurance counterparties. The assets used as collateral are
Treasury Gilts and AAA to AA Corporate Bonds (2024: Treasury Gilts, AAA to AA Corporate Bonds) having a residual maturity of over
61 years (2024: over 61 years).
While pledged as collateral, the Group is entitled to receive all of the cash flows from the assets above and there is no obligation to pay or
transfer cash flows arising from them to another entity. These assets are neither past due, nor impaired. The carrying value reflects the full
exposure of these assets.
The Group is permitted to sell or repledge collateral as per the International Swap Dealers Association agreements in place, including where
there has been no default by the owner of the collateral. As at 31 December 2025, the Group had repledged cash collateral with a fair value of
\u00a3447m (2024: \u00a3704m) in order to fulfil other collateral requirements in relation to derivatives contracts. The counterparties have an obligation
to return the\u00a0cash collateral to the Group. There are no other significant terms and conditions associated with the use of this cash collateral.
Financial investments include \u00a320,216m (2024: \u00a322,117m) of assets that have been sold but not derecognised and are subject to repurchase
agreements. Risks and rewards of these assets have been retained within the Group. The related obligation to repurchase the financial
assets is included within Payables and other financial liabilities (Note 26).
Financial investments have been allocated between those expected to be settled within 12 months and after 12 months in line with the
expected settlement of the backed liabilities. Assets in excess of the insurance and investment contract liabilities have been classified as
expected to be settled after 12 months.
(i) Financial investments and investment property at fair value
Shareholder
Unit linked
Total
2025
2025
2025
Notes
\u00a3m
\u00a3m
\u00a3m
Equity securities
2,072
232,472
234,544
Debt securities
79,772
147,998
227,770
Derivative assets
14
41,625
2,704
44,329
Loans at fair value
13(ii)
1,070
5,897
6,967
Financial investments
124,539
389,071
513,610
Investment property
6,839
4,797
11,636
Total financial investments at fair value
131,378
393,868
525,246
Shareholder
Unit linked
Total
2024
2024
2024
Notes
\u00a3m
\u00a3m
\u00a3m
Equity securities
2,948
198,342
201,290
Debt securities
78,207
148,411
226,618
Derivative assets
14
49,195
1,997
51,192
Loans at fair value
13(ii)
2,630
4,772
7,402
Financial investments
132,980
353,522
486,502
Investment property
5,955
3,867
9,822
Total financial investments at fair value
138,935
357,389
496,324
Included within unit linked equity securities are \u00a3109m (2024: \u00a3121m) of debt instruments which incorporate an embedded derivative linked
to the value of the Group\u2019s share price.
(ii) Fair value hierarchy
The table below breaks down the fair value of financial investments and investment property by fair value hierarchy level.
Total
Level 1
Level 2
Level 3
As at 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Shareholder
Equity securities
2,072
538
\u2013
1,534
Debt securities
79,772
43,247
16,425
20,100
Derivative assets
41,625
1
41,624
\u2013
Loans at fair value
1,070
\u2013
1,070
\u2013
Investment property
6,839
\u2013
\u2013
6,839
Total Shareholder
131,378
43,786
59,119
28,473
Unit linked
Equity securities
232,472
229,627
3
2,842
Debt securities
147,998
102,976
42,920
2,102
Derivative assets
2,704
43
2,661
\u2013
Loans at fair value
5,897
\u2013
5,897
\u2013
Investment property
4,797
\u2013
\u2013
4,797
Total Unit linked
393,868
332,646
51,481
9,741
Total financial investments and investment property at fair value
525,246
376,432
110,600
38,214
Debt securities at amortised cost1
6,930
\u2013
43
6,887
Loans at amortised cost 1
194
1
\u2013
193
1. This table includes debt securities and loans which are held at amortised cost on the Consolidated Balance Sheet at a total value of \u00a38,167m.
Total
Level 1
Level 2
Level 3
As at 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Shareholder
Equity securities
2,948
960
170
1,818
Debt securities
78,207
31,714
25,424
21,069
Derivative assets
49,195
7
49,188
\u2013
Loans at fair value
2,630
\u2013
2,630
\u2013
Investment property
5,955
\u2013
\u2013
5,955
Total Shareholder
138,935
32,681
77,412
28,842
Unit linked
Equity securities
198,342
197,532
1
809
Debt securities
148,411
97,799
49,269
1,343
Derivative assets
1,997
84
1,913
\u2013
Loans at fair value
4,772
\u2013
4,772
\u2013
Investment property
3,867
\u2013
\u2013
3,867
Total Unit Linked
357,389
295,415
55,955
6,019
Total financial investments and investment property at fair value
496,324
328,096
133,367
34,861
Debt securities at amortised cost1
7,847
\u2013
43
7,804
Loans at amortised cost 1
84
1
\u2013
83
1. This table includes debt securities and loans which are held at amortised cost on the Consolidated Balance Sheet at a total value of \u00a3 9,049m.
The levels of fair value measurement bases are defined as follows:
\u2022 Level 1: fair values measured using quoted prices (unadjusted) in active markets for identical assets or liabilities.
\u2022 Level 2: fair values measured using valuation techniques for all inputs significant to the measurement other than quoted prices included
within\u00a0Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
\u2022 Level 3: fair values measured using valuation techniques for any input for the asset or liability significant to the measurement that is not
based on\u00a0observable market data (unobservable inputs).
(a) Level 2 assets measured at fair value
All of the Group\u2019s Level 2 assets have been valued using standard market pricing sources, such as IHS Markit, ICE and Bloomberg, or Index
Providers such as Barclays, Merrill Lynch or JPMorgan. Each uses mathematical modelling and multiple source validation in order to
determine consensus prices, with the exception of OTC Derivative holdings; OTCs are marked to market using an in-house system (Lombard
Oberon), external vendor (IHS Markit), internal model or Counterparty Broker marks. In normal market conditions, we would consider these
market prices\u00a0to\u00a0be observable market prices. Following consultation with our pricing providers and a number of their contributing brokers,
we have considered that these prices are not from a suitably active market and have therefore classified them as Level 2.
The Group\u2019s policy is to re-assess categorisation of financial assets at the end of each reporting period and to recognise transfers between
levels\u00a0at that point in time. At 31 December 2025 debt securities totalling net \u00a310bn (2024: \u00a314bn) transferred from Level 2 to Level 1 in
the fair\u00a0value hierarchy.
(b) Level 3 assets measured at fair value
Level 3 assets, where modelling techniques are used, comprise property, unquoted securities, untraded debt securities and securities
where unquoted prices are provided by a single broker. Unquoted securities include suspended securities, investments in private equity
and property vehicles. Untraded debt securities include private placements, commercial real estate loans, income strips, retirement interest
only and other lifetime mortgages.
In many situations, inputs used to measure the fair value of an asset or liability may fall into different levels of the fair value hierarchy.
In\u00a0these situations, the Group determines the level in which the fair value falls based upon the lowest level input that is significant to
the\u00a0determination of\u00a0the fair value. As a result, both observable and unobservable inputs may be used in the determination of fair values
that\u00a0the Group has classified\u00a0within Level 3.
The Group determines the fair values of certain financial assets and liabilities based on quoted market prices, where available. The Group
also determines fair value based on estimated future cash flows discounted at the appropriate current market rate. As appropriate, fair
values reflect adjustments for counterparty credit quality, the Group\u2019s credit standing, liquidity and risk margins on unobservable inputs.
Fair values are subject to a control framework designed to ensure that input variables and outputs are assessed independent of the risk
taker. These inputs and outputs are reviewed and approved by a valuation committee and validated independently as appropriate.
Equity
securities
Other
financial
investments
Investment
property
Total
Equity
securities
Other
financial
investments
Investment
property
Total
2025
2025
2025
2025
2024
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
As at 1 January
2,627
22,412
9,822
34,861
2,392
20,463
8,893
31,748
Transfer to held for sale
(89)
(3,024)
\u2013
(3,113)
\u2013
\u2013
\u2013
\u2013
Total gains/(losses) for the year:
Realised gains or (losses) 1
4
(11)
(64)
(71)
4
(17)
(2)
(15)
Unrealised gains or (losses) 1
(109)
66
156
113
(208)
(278)
(20)
(506)
Purchases/Additions
2,295
5,581
2,007
9,883
789
5,649
1,502
7,940
Sales/Disposals
(301)
(3,098)
(264)
(3,663)
(364)
(3,369)
(552)
(4,285)
Transfers into Level 3
48
320
\u2013
368
\u2013
70
\u2013
70
Transfers out of Level 3
(92)
(36)
\u2013
(128)
\u2013
(144)
\u2013
(144)
Foreign exchange rate movements
(7)
(8)
(21)
(36)
14
38
1
53
As at 31 December
4,376
22,202
11,636
38,214
2,627
22,412
9,822
34,861
1. Realised and unrealised gains/(losses) are recognised in Investment return in the Consolidated Income Statement.
The breakdown below includes assets which are disclosed in Assets of operations classified as held for sale in the Consolidated Balance
Sheet where applicable.
Equity securities
Level 3 equity securities amount to \u00a34,487m (2024: \u00a32,627m), of which the majority is made up of holdings in investment property vehicles
and\u00a0private investment funds. They are valued at the proportion of the Group\u2019s holding of the Net Asset Value reported by the investment
vehicles.\u00a0Other equity securities are valued by a number of third-party specialists using a range of techniques which are often dependent on
the\u00a0maturity of\u00a0the underlying investment but can also depend on the characteristics of individual assets. Such techniques include transaction
values underpinned by analysis of milestone achievement and cash runway for early/start-up stage investments, discounted cash flow
models for\u00a0investments at the next stage of development and earnings multiples for more mature investments.
Other financial investments
Lifetime mortgage (LTM) loans and retirement interest only mortgages amount to \u00a35,756m (2024: \u00a35,861m). Lifetime mortgages are valued
using a discounted cash flow model by projecting best estimate net asset proceeds and discounted using rates inferred from current LTM
loan pricing. The inferred illiquidity premiums for the majority of the portfolio range between 150 and 250bps. (2024: between 150 and
250bps). This\u00a0ensures the value of loans at outset is consistent with the purchase price of the loan and achieves consistency between new
and in-force loans. Lifetime mortgages include a no negative equity guarantee (NNEG) to borrowers. This ensures that if there is a shortfall
between the\u00a0sale proceeds of the property and the outstanding loan balance on redemption of the loan, the value of the loan will be reduced
by this amount. The NNEG on loan redemption is valued as a series of put\u00a0options, which we calculate using a variant of the Black-Scholes
formula. Key assumptions in the valuation of lifetime mortgages include short-term and long-term property growth rates, property index
volatility, voluntary early repayments and longevity assumptions. The valuation as\u00a0at 31 December 2025 reflects a combination of short-
term and long-term property growth rate assumptions equivalent to a flat rate of 3.5% annually (2024: 3.4% annually), after allowing for
the effects of dilapidation. The values of the properties collateralising the LTM loans are updated from the date of the last property valuation
to the valuation date by indexing using UK regional house price indices.
Private credit loans (including commercial real estate loans) amount to \u00a314,511m (2024: \u00a311,779m). Their valuation is determined by
discounted future cash flows which are based on the market yield and spread of the Asset Management approved comparable bonds
and the initial transaction spread, both of which are agreed by S&P Global who also provide an independent verification of the selection of
the comparable bonds. Unobservable inputs that go into the determination of\u00a0comparators include rating, sector, sub-sector, performance
dynamics, financing structure and duration of investment. Existing private credit investments, which were executed as far back as 2011, are
subject to a range of interest rate formats, although the majority are fixed rate. The weighted average duration of the portfolio is 7.0 years
(2024: 7.6 years), with a weighted average life of 10.0 years (2024: 11.0 years). Maturities in the portfolio currently extend out\u00a0to\u00a02074
(2024: to 2074). The private credit portfolio of assets has internal ratings assigned by an independent credit team in line with internally
developed methodologies. These credit ratings range from AAA to BB- (2024: AAA to BB-).
Private placements, all of which relate to held for sale assets, amount to \u00a32,579m (2024: \u00a32,181m). They are valued using a pricing matrix
comprised of a public spread matrix, internal ratings assigned to each holding, average life of each holding and a premium spread matrix. These
are added to the risk-free rate to calculate the discounted cash flows and establish a market value for each investment grade private placement.
Income strip assets amount to \u00a31,272m (2024: \u00a31,280m). Their valuation is outsourced to CBRE who apply a yield to maturity to\u00a0discounted
future cash flows to derive valuations. The overall valuation takes into account the property location, tenant details, tenure, rent, rental break
terms, lease expiries and underlying residual value of the property. The valuation as at 31 December 2025 reflects equivalent yield ranges
between 3% and 18% (2024: between 2% to 17%) and estimated rental values (ERV) between \u00a31 and \u00a326 per sq.ft
(2024: between \u00a37 and \u00a3367 per sq.ft).
Commercial mortgage loans, all of which relate to held for sale assets, amount to \u00a3795m (2024: \u00a3843m) and are determined by incorporating
credit risk for performing loans at the portfolio level and adjusted for loans identified to be distressed at the loan level. The projected cash flows
of each loan are discounted along stochastic risk-free rate paths and are inclusive of an Option Adjusted Spread (OAS), derived from current
internal pricing on new loans, along with\u00a0the best observable inputs.
Other debt securities which are not traded in an active market amount to \u00a3663m (2024: \u00a3468m). They have been valued using third-party
or\u00a0counterparty valuations and these prices are considered to be unobservable due to infrequent market transactions.
Investment property
Level 3 investment property amounting to \u00a311,636m (2024: \u00a39,822m) is valued with the involvement of external valuers. All property
valuations in\u00a0the UK are carried out in accordance with the latest edition of the Valuation Standards published by the Royal Institute of
Chartered Surveyors and are undertaken by appropriately qualified valuers as defined therein. Outside the UK, valuations are produced in
conjunction with external qualified professional values in the countries concerned. Whilst transaction evidence underpins the valuation
process, the definition of market value, including the commentary, in practice requires the valuer to reflect the realities of the current market.
In this context, valuers must use their market\u00a0knowledge and professional judgement and not rely only upon market sentiment based on
historic transactional comparables.
The valuation of investment properties also includes an income approach that is based on current rental income plus anticipated uplifts,
where\u00a0the uplift and discount rates are derived from rates implied by recent market transactions. These inputs are deemed unobservable.
The\u00a0valuation as at 31 December 2025 reflects equivalent yield ranges between 1% and 53% (2024: between 1% and 53%) and Estimated
Rental Value (ERV) between \u00a31 and \u00a3219 per sq.ft (2024: between \u00a32 and \u00a3369 per sq.ft).
The table below shows the valuation of investment property by sector:
2025
2024
\u00a3m
\u00a3m
Retail
1,351
1,242
Leisure
580
493
Distribution
1,279
1,058
Office Space
3,267
2,876
Industrial and other commercial
2,306
1,805
Accommodation
2,853
2,348
Total investment property
11,636
9,822
c) Effect of changes in assumptions on Level 3 assets
Fair values of financial instruments are, in certain circumstances, measured using valuation techniques that incorporate assumptions that are
not\u00a0evidenced by prices from observable current market transactions in the same instrument and are not based on observable market data.
Where material, the Group assesses the sensitivity of fair values of Level 3 investments to changes in unobservable inputs to reasonable
alternative assumptions. The table below shows the impact of applying these sensitivities to the fair value of Level 3 assets as at
31 December 2025, including assets which are part of operations classified as held for sale. Further disclosure on how these sensitivities
have been applied can be found in the descriptions following the table.
Sensitivities
Fair value 2025
Positive impact
Negative impact
\u00a3m
\u00a3m
\u00a3m
Lifetime mortgages
5,756
204
(246)
Private credit portfolios
17,885
756
(756)
Investment property
11,636
943
(926)
Other investments1
6,422
396
(479)
Total Level 3 assets
41,699
2,299
(2,407)
1. Other investments include Level 3 equity securities, income strip assets and other traded debt securities which are Level 3.
The sensitivities are not a function of sensitising a single variable relating to the valuation of the asset, but rather a function of flexing
multiple factors often at individual asset level. The following sets out a number of key factors by asset type and how they have been
flexed to derive reasonable alternative valuations.
Lifetime mortgages
Key assumptions used in the valuation of lifetime mortgage assets are listed in Note 13(ii)(b) and sensitivities are applied to each assumption
which are used to derive the values in the above table. The most significant increase in value is a 20bps reduction in the discount rate which,
applied in isolation produces a sensitised value of \u00a3134m. The most significant decrease in value is a 20bps increase in the discount rate
which, applied in isolation produces a sensitised value of \u00a3(130)m.
Private credit portfolios
The sensitivity in the private credit portfolio has been determined through a method which estimates investment spread value premium
differences as compared to the institutional investment market. Individual investment characteristics of each holding, such as credit rating
and duration are used to determine spread differentials for the purposes of determining alternate values. Spread differentials are determined
to be lower for highly rated and/or shorter duration assets as compared to lower rated and/or longer duration assets. A significant component of
the spread differential is in relation to the selection of comparator bonds, which is the potential difference in spread of the basket of relevant
comparators determined by respective investors. If we were to take an AA rated asset it may attract a spread differential of 30bps on the
selection of comparator bonds as opposed to 45bps for a similar duration BBB rated asset. Applied in isolation the sensitivity used to reflect
the spread in comparator bond selection results in sensitised values of \u00a3260m and \u00a3(260)m.
Investment property
Investment property holdings are valued by independent valuers on the basis of open market value as defined in the appraisal and valuation
manual of the Royal Institute of Chartered Surveyors (RICS). As such, sensitivities are calculated through a mixture of asset level and portfolio
level methodologies which make reference to individual investment characteristics of the holding but do not flex individual assumptions
used by the independent expert in valuing the holdings. Valuation uncertainty is assessed using three methodologies that are each applied
independently and then weighted equally to determine the overall portfolio sensitivity: (i) acceptable margin of error approach reflecting
real asset valuation specialists view on uncertainty, (ii) an fixed income approach that derives sensitivities for each asset using duration,
credit rating and inflation linkage to determine asset\u2011specific stress factors and (iii) a property yield approach that flexes valuation yields by
reference to remaining term and credit rating (for example, AA rated asset with remaining term of 25 years in normal market conditions this
would lead to a 15bps yield flex as opposed to a 35bps yield flex for a BBB rated asset with a 30 year remaining term). While these three
methodologies are combined to produce a weighted average sensitivity on Sales and Leaseback and Build to Rent portfolio. Other portfolios
apply margin of error sensitivity.
The methodology which leads to the most significant sensitivity at the balance sheet date is an acceptable margin of error reflecting real
asset valuation specialists view on uncertainty of 10% either way, subject to the valuation being undertaken with due care. If this sensitivity
were to be taken without a weighting it would produce sensitised values of \u00a3587m and \u00a3(587)m.
It should be noted that some sensitivities described above are non-linear and larger or smaller impacts should not be interpolated or
extrapolated from these results.
14. Derivative assets and liabilities
The Group uses derivatives as a component of efficient portfolio management. This includes, but is not limited to, hedging economic exposure to
foreign currencies, interest rates, inflation and credit risks. The Group uses hedge accounting, provided the prescribed criteria in IFRS 9, \u2018Financial
Instruments\u2019 are met, to recognise the offsetting effects of changes in the fair value or cash flow of the derivative instrument and the hedged item.
Hedge accounting
The Group is exposed to foreign currency risk to the extent that there is a mismatch between the currencies in which cash flows are required
to be settled in and the functional currency of the Group.
Currently, the Group uses cash flow hedge accounting and hedges foreign exchange risk on:
\u2022 fixed rate USD denominated borrowings (the hedged items), using cross-currency interest rate swaps (the hedging instrument)
\u2022 fixed rate EUR denominated borrowings (the hedged items), using a cross-currency interest rate swap (the hedging instrument)
\u2022 the forecast sale proceeds arising from the disposal of the shares held in Legal & General America Inc (the hedged item), using forward
exchange contracts (the hedging instruments).
The Group's risk management policy is to mitigate foreign currency risk from fluctuations in the EUR or USD exchange rate. These risks stem
from cash flows under the USD and EUR denominated borrowings and the forecast sales proceeds in USD.
The Group applies a hedge ratio of 1:1 for its USD denominated borrowing and a hedge ratio of 1:2 for its EUR denominated borrowing to
balance yield with prudent risk management. The Group applies a hedge ratio of 1:1 for hedging the forecast sale proceeds arising from the
disposal of the shares held in Legal & General America Inc.
The Group determines the existence of an economic relationship between the hedging instruments and the hedged items based on the
currency, amount and timing of the respective cash flows. In these hedging relationships, the main sources of ineffectiveness are:
\u2022 the fair value of the hedging instrument on the hedge relationship designation date (if not zero)
\u2022 changes in the contractual terms or timing of the payments on the hedged item
\u2022 a change in the credit risk of L&G Group Plc or the counterparty to the cross-currency interest rate swap.
Cash flow hedges \u2013 cross-currency swap contracts
The Group has the following cross-currency hedge arrangements:
\u2022 The Group has entered into fixed rate borrowings denominated in USD and is therefore exposed to foreign exchange risk. In order to
hedge this risk the Group has entered into cross-currency interest rate swaps, enabling the exposure to be swapped into a fixed rate in\u00a0
its functional currency. These had a net liabilities fair value totalling \u00a346m (2024: net asset fair value \u00a342m) and a notional amount of
\u00a31,099m at 31 December 2025 (2024: \u00a31,099m). There was no ineffectiveness recognised in the income statement in respect of these
hedges during 2025. The maturity of the swaps are March 2027 and April 2032.
\u2022 The Group has entered into fixed rate borrowings denominated in EUR and is therefore exposed to foreign exchange risk. In order to
hedge this risk the Group has entered into a cross-currency interest rate swap, enabling the exposure to be swapped into a fixed rate in its
functional currency. These had a net liabilities fair value totalling \u00a314m (2024: \u00a3nil) and a notional amount of \u00a3302m at 31 December
2025 (2024: \u00a3nil). Ineffectiveness recognised in Investment Return was \u00a30.9m in respect of these hedges during 2025. The swap matures
in September 2035.
The amounts recognised in the cash flow hedging reserve will be reclassified to the Consolidated Income Statement to the extent that the
borrowings impact profit or loss through the accrual of interest or the translation of the foreign currency denominated debt at the reporting
date. The average fixed interest rate of the cross-currency swap contracts was 4.3%.
Cash flow hedges - forward exchange contracts
The Group is exposed to foreign currency risks arising from the $2.6bn sales proceeds of the disposal of the shares held in Legal & General
America Inc. In order to mitigate these risks, the Group has entered into forward exchange contracts and designated the hedging relationship
and applied cash flow hedge accounting.
These contracts had a net asset fair value totalling \u00a353m (2024: \u00a3nil) and a total notional amount of \u00a31,243m at 31 December 2025 with an
average forward rate of 1.29. Contracts with a total notional amount of \u00a3643m mature on 27 February 2026 and the remaining contracts
with a total notional amount of \u00a3600m mature on 30 June 2026.
The amounts recognised in the cash flow hedging reserve will be reclassified to the Consolidated Income Statement on completion of the
disposal. There was no ineffectiveness recognised in the income statement in respect of these hedges during 2025.
Reconciliation of equity balances for each type of risk category
The following table provides a reconciliation by risk category of components of equity and analysis of OCI items resulting from cash flow
hedge accounting.
Hedging reserve
Foreign currency risk
\u00a3m
As at 1 January 2025
48
Changes in fair value of the hedging instrument
32
Amount reclassified to investment return
12
Related tax
2
As at 31 December 2025
94
Hedging reserve
Foreign currency risk
\u00a3m
As at 1 January 2024
46
Changes in fair value of the hedging instrument
3
Amount reclassified to investment return
\u2013
Related tax
(1)
As at 31 December 2024
48
Other derivative contracts \u2013 held for trading
The Group uses certain derivative contracts which are effective hedges of economic exposures in accordance with the Group\u2019s risk management
policy, but for various reasons are not designated within a formal hedge accounting relationship. Therefore, these contracts must be designated as
held for trading and gains and losses on these contracts are recognised immediately in the Consolidated Income\u00a0Statement.
Fair values
Fair values
Assets1
Liabilities2
Assets1
Liabilities2
2025
2025
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Shareholder derivatives:
Interest rate contracts \u2013 held for trading
29,523
30,723
38,914
39,895
Forward exchange contracts \u2013 held for trading
16
9
35
31
Forward exchange contracts - cash flow hedge
53
\u2013
\u2013
\u2013
Cross-currency swap contracts \u2013 held for trading
1,771
3,461
1,009
2,323
Cross-currency swap contracts \u2013 cash flow hedge
7
67
42
\u2013
Inflation swap contracts \u2013 held for trading
10,202
14,739
9,176
11,595
Credit derivatives \u2013 held for trading
2
13
\u2013
18
Equity/index derivatives \u2013 held for trading
5
3
2
4
Other derivatives \u2013 held for trading
46
436
17
408
Total shareholder derivatives
41,625
49,451
49,195
54,274
Unit linked derivatives:
Interest rate contracts \u2013 held for trading
409
1,364
564
2,082
Forward foreign exchange contracts \u2013 held for trading
1,806
235
558
1,077
Credit derivatives \u2013 held for trading
2
3
2
1
Inflation swap contracts \u2013 held for trading
362
89
758
175
Equity/index derivatives \u2013 held for trading
65
32
37
228
Other derivatives \u2013 held for trading
60
44
78
36
Total unit linked derivatives
2,704
1,767
1,997
3,599
Total derivative assets and liabilities
44,329
51,218
51,192
57,873
1.Derivative assets are reported in the Consolidated Balance Sheet within Financial investments and investment property (Note 13).
2.Derivative liabilities are reported in the Consolidated Balance Sheet within Payables and other financial liabilities (Note 26).
The contractual undiscounted cash flows in relation to non-unit linked derivatives have the following maturity profile. Unit linked derivatives
have not been included as shareholders are not directly exposed to liquidity risks.
Maturity profile of undiscounted cashflows
Fair values
Within 1
year
1-5 years
5-15 years
15-25 years
Over 25
years
Total
As at 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Cash inflows
Shareholder derivatives
Derivative assets
41,625
17,810
45,791
65,608
32,514
17,792
179,515
Derivative liabilities
(49,451)
10,068
33,390
48,620
23,390
12,873
128,341
Total
(7,826)
27,878
79,181
114,228
55,904
30,665
307,856
Cash outflows
Shareholder derivatives
Derivative assets
41,625
(14,679)
(36,751)
(48,353)
(23,807)
(14,355)
(137,945)
Derivative liabilities
(49,451)
(12,815)
(41,969)
(64,318)
(35,801)
(22,046)
(176,949)
Total
(7,826)
(27,494)
(78,720)
(112,671)
(59,608)
(36,401)
(314,894)
Net cash flows
384
461
1,557
(3,704)
(5,736)
(7,038)
Maturity profile of undiscounted cashflows
Fair values
Within 1 year
1-5 years
5-15 years
15-25 years
Over 25
years
Total
As at 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Cash inflows
Shareholder derivatives
Derivative assets
49,195
23,319
57,912
75,704
33,823
18,909
209,667
Derivative liabilities
(54,274)
14,840
39,656
53,019
23,103
14,275
144,893
Total
(5,079)
38,159
97,568
128,723
56,926
33,184
354,560
Cash outflows
Shareholder derivatives
Derivative assets
49,195
(15,374)
(40,194)
(49,928)
(22,692)
(14,175)
(142,363)
Derivative liabilities
(54,274)
(23,758)
(60,276)
(80,320)
(35,843)
(23,122)
(223,319)
Total
(5,079)
(39,132)
(100,470)
(130,248)
(58,535)
(37,297)
(365,682)
Net cash flows
(973)
(2,902)
(1,525)
(1,609)
(4,113)
(11,122)
Future cash flows on the floating legs of interest rate and exchange derivatives are calculated using current spot rates, which may differ from
the market expectation incorporated in the fair value.
Cash flows arising from implied events covered by credit derivatives are presented in the tables above on an expected basis as cash flows
within\u00a0one year.
Cash inflows or outflows are presented on a net basis where the Group is required to settle net or has a legally enforceable right of offset
and the intention is to settle on a net basis.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-665": { "value": "
13. Financial investments and investment property
Shareholder
Unit linked
Total
2025
2025
2025
Financial investments at fair value classified as:
Note
\u00a3m
\u00a3m
\u00a3m
Fair value through profit or loss1
79,987
380,470
460,457
Fair value through other comprehensive income
1,857
\u2013
1,857
Fair value through profit or loss - derivatives1
41,625
2,704
44,329
Loans at fair value through profit or loss 1
1,070
5,897
6,967
Financial investments at fair value
13(i)
124,539
389,071
513,610
Debt securities at amortised cost
7,973
\u2013
7,973
Loans at amortised cost
194
\u2013
194
Total financial investments
132,706
389,071
521,777
Investment property
6,839
4,797
11,636
Total financial investments and investment property
139,545
393,868
533,413
Expected to be recovered within 12 months
39,173
Expected to be recovered after 12 months
494,240
Shareholder
Unit linked
Total
2024
2024
2024
Financial investments at fair value classified as:
Note
\u00a3m
\u00a3m
\u00a3m
Fair value through profit or loss1
79,233
346,753
425,986
Fair value through other comprehensive income
1,922
\u2013
1,922
Fair value through profit or loss - derivatives1
49,195
1,997
51,192
Loans at fair value through profit or loss 1
2,630
4,772
7,402
Financial investments at fair value
13(i)
132,980
353,522
486,502
Debt securities at amortised cost
8,965
\u2013
8,965
Loans at amortised cost
84
\u2013
84
Total financial investments
142,029
353,522
495,551
Investment property
5,955
3,867
9,822
Total financial investments and investment property
147,984
357,389
505,373
Expected to be recovered within 12 months
36,632
Expected to be recovered after 12 months
468,741
1. Mandatorily measured at fair value through profit or loss.
Investment risks on unit linked assets are borne by the policyholders. The remaining risks associated with financial investments are outlined
in\u00a0Note 9.
Financial investments and Cash and cash equivalents (Note 16) together include:
\u2022 \u00a32,670m (2024: \u00a32,755m) of assets pledged as collateral against net derivative liability counterparty positions. The assets used as
collateral are Treasury Gilts, Foreign Government Bonds, AAA, AA, A and BBB Corporate Bonds and Cash ( 2024: Treasury Gilts, Foreign
Government Bonds, AAA, AA, A and BBB Corporate Bonds and Cash) having a residual maturity of over 79 years ( 2024: over 32 years).
\u2022 \u00a34,541m (2024: \u00a35,377m) of assets pledged as collateral in relation to various pension risk transfer deals. The assets used as collateral
are\u00a0Treasury Gilts, AAA to BBB Corporate Bonds and Cash (2024: Treasury Gilts, AAA to BBB Corporate Bonds and Cash) having a
residual maturity of over 44 years (2024: over 45 years).
\u2022 \u00a3839m (2024: \u00a3904m) of assets pledged in respect of longevity swaps with reinsurance counterparties. The assets used as collateral are
Treasury Gilts and AAA to AA Corporate Bonds (2024: Treasury Gilts, AAA to AA Corporate Bonds) having a residual maturity of over
61 years (2024: over 61 years).
While pledged as collateral, the Group is entitled to receive all of the cash flows from the assets above and there is no obligation to pay or
transfer cash flows arising from them to another entity. These assets are neither past due, nor impaired. The carrying value reflects the full
exposure of these assets.
The Group is permitted to sell or repledge collateral as per the International Swap Dealers Association agreements in place, including where
there has been no default by the owner of the collateral. As at 31 December 2025, the Group had repledged cash collateral with a fair value of
\u00a3447m (2024: \u00a3704m) in order to fulfil other collateral requirements in relation to derivatives contracts. The counterparties have an obligation
to return the\u00a0cash collateral to the Group. There are no other significant terms and conditions associated with the use of this cash collateral.
Financial investments include \u00a320,216m (2024: \u00a322,117m) of assets that have been sold but not derecognised and are subject to repurchase
agreements. Risks and rewards of these assets have been retained within the Group. The related obligation to repurchase the financial
assets is included within Payables and other financial liabilities (Note 26).
Financial investments have been allocated between those expected to be settled within 12 months and after 12 months in line with the
expected settlement of the backed liabilities. Assets in excess of the insurance and investment contract liabilities have been classified as
expected to be settled after 12 months.
(i) Financial investments and investment property at fair value
Shareholder
Unit linked
Total
2025
2025
2025
Notes
\u00a3m
\u00a3m
\u00a3m
Equity securities
2,072
232,472
234,544
Debt securities
79,772
147,998
227,770
Derivative assets
14
41,625
2,704
44,329
Loans at fair value
13(ii)
1,070
5,897
6,967
Financial investments
124,539
389,071
513,610
Investment property
6,839
4,797
11,636
Total financial investments at fair value
131,378
393,868
525,246
Shareholder
Unit linked
Total
2024
2024
2024
Notes
\u00a3m
\u00a3m
\u00a3m
Equity securities
2,948
198,342
201,290
Debt securities
78,207
148,411
226,618
Derivative assets
14
49,195
1,997
51,192
Loans at fair value
13(ii)
2,630
4,772
7,402
Financial investments
132,980
353,522
486,502
Investment property
5,955
3,867
9,822
Total financial investments at fair value
138,935
357,389
496,324
Included within unit linked equity securities are \u00a3109m (2024: \u00a3121m) of debt instruments which incorporate an embedded derivative linked
to the value of the Group\u2019s share price.
(ii) Fair value hierarchy
The table below breaks down the fair value of financial investments and investment property by fair value hierarchy level.
Total
Level 1
Level 2
Level 3
As at 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Shareholder
Equity securities
2,072
538
\u2013
1,534
Debt securities
79,772
43,247
16,425
20,100
Derivative assets
41,625
1
41,624
\u2013
Loans at fair value
1,070
\u2013
1,070
\u2013
Investment property
6,839
\u2013
\u2013
6,839
Total Shareholder
131,378
43,786
59,119
28,473
Unit linked
Equity securities
232,472
229,627
3
2,842
Debt securities
147,998
102,976
42,920
2,102
Derivative assets
2,704
43
2,661
\u2013
Loans at fair value
5,897
\u2013
5,897
\u2013
Investment property
4,797
\u2013
\u2013
4,797
Total Unit linked
393,868
332,646
51,481
9,741
Total financial investments and investment property at fair value
525,246
376,432
110,600
38,214
Debt securities at amortised cost1
6,930
\u2013
43
6,887
Loans at amortised cost 1
194
1
\u2013
193
1. This table includes debt securities and loans which are held at amortised cost on the Consolidated Balance Sheet at a total value of \u00a38,167m.
Total
Level 1
Level 2
Level 3
As at 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Shareholder
Equity securities
2,948
960
170
1,818
Debt securities
78,207
31,714
25,424
21,069
Derivative assets
49,195
7
49,188
\u2013
Loans at fair value
2,630
\u2013
2,630
\u2013
Investment property
5,955
\u2013
\u2013
5,955
Total Shareholder
138,935
32,681
77,412
28,842
Unit linked
Equity securities
198,342
197,532
1
809
Debt securities
148,411
97,799
49,269
1,343
Derivative assets
1,997
84
1,913
\u2013
Loans at fair value
4,772
\u2013
4,772
\u2013
Investment property
3,867
\u2013
\u2013
3,867
Total Unit Linked
357,389
295,415
55,955
6,019
Total financial investments and investment property at fair value
496,324
328,096
133,367
34,861
Debt securities at amortised cost1
7,847
\u2013
43
7,804
Loans at amortised cost 1
84
1
\u2013
83
1. This table includes debt securities and loans which are held at amortised cost on the Consolidated Balance Sheet at a total value of \u00a3 9,049m.
The levels of fair value measurement bases are defined as follows:
\u2022 Level 1: fair values measured using quoted prices (unadjusted) in active markets for identical assets or liabilities.
\u2022 Level 2: fair values measured using valuation techniques for all inputs significant to the measurement other than quoted prices included
within\u00a0Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
\u2022 Level 3: fair values measured using valuation techniques for any input for the asset or liability significant to the measurement that is not
based on\u00a0observable market data (unobservable inputs).
(a) Level 2 assets measured at fair value
All of the Group\u2019s Level 2 assets have been valued using standard market pricing sources, such as IHS Markit, ICE and Bloomberg, or Index
Providers such as Barclays, Merrill Lynch or JPMorgan. Each uses mathematical modelling and multiple source validation in order to
determine consensus prices, with the exception of OTC Derivative holdings; OTCs are marked to market using an in-house system (Lombard
Oberon), external vendor (IHS Markit), internal model or Counterparty Broker marks. In normal market conditions, we would consider these
market prices\u00a0to\u00a0be observable market prices. Following consultation with our pricing providers and a number of their contributing brokers,
we have considered that these prices are not from a suitably active market and have therefore classified them as Level 2.
The Group\u2019s policy is to re-assess categorisation of financial assets at the end of each reporting period and to recognise transfers between
levels\u00a0at that point in time. At 31 December 2025 debt securities totalling net \u00a310bn (2024: \u00a314bn) transferred from Level 2 to Level 1 in
the fair\u00a0value hierarchy.
(b) Level 3 assets measured at fair value
Level 3 assets, where modelling techniques are used, comprise property, unquoted securities, untraded debt securities and securities
where unquoted prices are provided by a single broker. Unquoted securities include suspended securities, investments in private equity
and property vehicles. Untraded debt securities include private placements, commercial real estate loans, income strips, retirement interest
only and other lifetime mortgages.
In many situations, inputs used to measure the fair value of an asset or liability may fall into different levels of the fair value hierarchy.
In\u00a0these situations, the Group determines the level in which the fair value falls based upon the lowest level input that is significant to
the\u00a0determination of\u00a0the fair value. As a result, both observable and unobservable inputs may be used in the determination of fair values
that\u00a0the Group has classified\u00a0within Level 3.
The Group determines the fair values of certain financial assets and liabilities based on quoted market prices, where available. The Group
also determines fair value based on estimated future cash flows discounted at the appropriate current market rate. As appropriate, fair
values reflect adjustments for counterparty credit quality, the Group\u2019s credit standing, liquidity and risk margins on unobservable inputs.
Fair values are subject to a control framework designed to ensure that input variables and outputs are assessed independent of the risk
taker. These inputs and outputs are reviewed and approved by a valuation committee and validated independently as appropriate.
Equity
securities
Other
financial
investments
Investment
property
Total
Equity
securities
Other
financial
investments
Investment
property
Total
2025
2025
2025
2025
2024
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
As at 1 January
2,627
22,412
9,822
34,861
2,392
20,463
8,893
31,748
Transfer to held for sale
(89)
(3,024)
\u2013
(3,113)
\u2013
\u2013
\u2013
\u2013
Total gains/(losses) for the year:
Realised gains or (losses) 1
4
(11)
(64)
(71)
4
(17)
(2)
(15)
Unrealised gains or (losses) 1
(109)
66
156
113
(208)
(278)
(20)
(506)
Purchases/Additions
2,295
5,581
2,007
9,883
789
5,649
1,502
7,940
Sales/Disposals
(301)
(3,098)
(264)
(3,663)
(364)
(3,369)
(552)
(4,285)
Transfers into Level 3
48
320
\u2013
368
\u2013
70
\u2013
70
Transfers out of Level 3
(92)
(36)
\u2013
(128)
\u2013
(144)
\u2013
(144)
Foreign exchange rate movements
(7)
(8)
(21)
(36)
14
38
1
53
As at 31 December
4,376
22,202
11,636
38,214
2,627
22,412
9,822
34,861
1. Realised and unrealised gains/(losses) are recognised in Investment return in the Consolidated Income Statement.
The breakdown below includes assets which are disclosed in Assets of operations classified as held for sale in the Consolidated Balance
Sheet where applicable.
Equity securities
Level 3 equity securities amount to \u00a34,487m (2024: \u00a32,627m), of which the majority is made up of holdings in investment property vehicles
and\u00a0private investment funds. They are valued at the proportion of the Group\u2019s holding of the Net Asset Value reported by the investment
vehicles.\u00a0Other equity securities are valued by a number of third-party specialists using a range of techniques which are often dependent on
the\u00a0maturity of\u00a0the underlying investment but can also depend on the characteristics of individual assets. Such techniques include transaction
values underpinned by analysis of milestone achievement and cash runway for early/start-up stage investments, discounted cash flow
models for\u00a0investments at the next stage of development and earnings multiples for more mature investments.
Other financial investments
Lifetime mortgage (LTM) loans and retirement interest only mortgages amount to \u00a35,756m (2024: \u00a35,861m). Lifetime mortgages are valued
using a discounted cash flow model by projecting best estimate net asset proceeds and discounted using rates inferred from current LTM
loan pricing. The inferred illiquidity premiums for the majority of the portfolio range between 150 and 250bps. (2024: between 150 and
250bps). This\u00a0ensures the value of loans at outset is consistent with the purchase price of the loan and achieves consistency between new
and in-force loans. Lifetime mortgages include a no negative equity guarantee (NNEG) to borrowers. This ensures that if there is a shortfall
between the\u00a0sale proceeds of the property and the outstanding loan balance on redemption of the loan, the value of the loan will be reduced
by this amount. The NNEG on loan redemption is valued as a series of put\u00a0options, which we calculate using a variant of the Black-Scholes
formula. Key assumptions in the valuation of lifetime mortgages include short-term and long-term property growth rates, property index
volatility, voluntary early repayments and longevity assumptions. The valuation as\u00a0at 31 December 2025 reflects a combination of short-
term and long-term property growth rate assumptions equivalent to a flat rate of 3.5% annually (2024: 3.4% annually), after allowing for
the effects of dilapidation. The values of the properties collateralising the LTM loans are updated from the date of the last property valuation
to the valuation date by indexing using UK regional house price indices.
Private credit loans (including commercial real estate loans) amount to \u00a314,511m (2024: \u00a311,779m). Their valuation is determined by
discounted future cash flows which are based on the market yield and spread of the Asset Management approved comparable bonds
and the initial transaction spread, both of which are agreed by S&P Global who also provide an independent verification of the selection of
the comparable bonds. Unobservable inputs that go into the determination of\u00a0comparators include rating, sector, sub-sector, performance
dynamics, financing structure and duration of investment. Existing private credit investments, which were executed as far back as 2011, are
subject to a range of interest rate formats, although the majority are fixed rate. The weighted average duration of the portfolio is 7.0 years
(2024: 7.6 years), with a weighted average life of 10.0 years (2024: 11.0 years). Maturities in the portfolio currently extend out\u00a0to\u00a02074
(2024: to 2074). The private credit portfolio of assets has internal ratings assigned by an independent credit team in line with internally
developed methodologies. These credit ratings range from AAA to BB- (2024: AAA to BB-).
Private placements, all of which relate to held for sale assets, amount to \u00a32,579m (2024: \u00a32,181m). They are valued using a pricing matrix
comprised of a public spread matrix, internal ratings assigned to each holding, average life of each holding and a premium spread matrix. These
are added to the risk-free rate to calculate the discounted cash flows and establish a market value for each investment grade private placement.
Income strip assets amount to \u00a31,272m (2024: \u00a31,280m). Their valuation is outsourced to CBRE who apply a yield to maturity to\u00a0discounted
future cash flows to derive valuations. The overall valuation takes into account the property location, tenant details, tenure, rent, rental break
terms, lease expiries and underlying residual value of the property. The valuation as at 31 December 2025 reflects equivalent yield ranges
between 3% and 18% (2024: between 2% to 17%) and estimated rental values (ERV) between \u00a31 and \u00a326 per sq.ft
(2024: between \u00a37 and \u00a3367 per sq.ft).
Commercial mortgage loans, all of which relate to held for sale assets, amount to \u00a3795m (2024: \u00a3843m) and are determined by incorporating
credit risk for performing loans at the portfolio level and adjusted for loans identified to be distressed at the loan level. The projected cash flows
of each loan are discounted along stochastic risk-free rate paths and are inclusive of an Option Adjusted Spread (OAS), derived from current
internal pricing on new loans, along with\u00a0the best observable inputs.
Other debt securities which are not traded in an active market amount to \u00a3663m (2024: \u00a3468m). They have been valued using third-party
or\u00a0counterparty valuations and these prices are considered to be unobservable due to infrequent market transactions.
Investment property
Level 3 investment property amounting to \u00a311,636m (2024: \u00a39,822m) is valued with the involvement of external valuers. All property
valuations in\u00a0the UK are carried out in accordance with the latest edition of the Valuation Standards published by the Royal Institute of
Chartered Surveyors and are undertaken by appropriately qualified valuers as defined therein. Outside the UK, valuations are produced in
conjunction with external qualified professional values in the countries concerned. Whilst transaction evidence underpins the valuation
process, the definition of market value, including the commentary, in practice requires the valuer to reflect the realities of the current market.
In this context, valuers must use their market\u00a0knowledge and professional judgement and not rely only upon market sentiment based on
historic transactional comparables.
The valuation of investment properties also includes an income approach that is based on current rental income plus anticipated uplifts,
where\u00a0the uplift and discount rates are derived from rates implied by recent market transactions. These inputs are deemed unobservable.
The\u00a0valuation as at 31 December 2025 reflects equivalent yield ranges between 1% and 53% (2024: between 1% and 53%) and Estimated
Rental Value (ERV) between \u00a31 and \u00a3219 per sq.ft (2024: between \u00a32 and \u00a3369 per sq.ft).
The table below shows the valuation of investment property by sector:
2025
2024
\u00a3m
\u00a3m
Retail
1,351
1,242
Leisure
580
493
Distribution
1,279
1,058
Office Space
3,267
2,876
Industrial and other commercial
2,306
1,805
Accommodation
2,853
2,348
Total investment property
11,636
9,822
c) Effect of changes in assumptions on Level 3 assets
Fair values of financial instruments are, in certain circumstances, measured using valuation techniques that incorporate assumptions that are
not\u00a0evidenced by prices from observable current market transactions in the same instrument and are not based on observable market data.
Where material, the Group assesses the sensitivity of fair values of Level 3 investments to changes in unobservable inputs to reasonable
alternative assumptions. The table below shows the impact of applying these sensitivities to the fair value of Level 3 assets as at
31 December 2025, including assets which are part of operations classified as held for sale. Further disclosure on how these sensitivities
have been applied can be found in the descriptions following the table.
Sensitivities
Fair value 2025
Positive impact
Negative impact
\u00a3m
\u00a3m
\u00a3m
Lifetime mortgages
5,756
204
(246)
Private credit portfolios
17,885
756
(756)
Investment property
11,636
943
(926)
Other investments1
6,422
396
(479)
Total Level 3 assets
41,699
2,299
(2,407)
1. Other investments include Level 3 equity securities, income strip assets and other traded debt securities which are Level 3.
The sensitivities are not a function of sensitising a single variable relating to the valuation of the asset, but rather a function of flexing
multiple factors often at individual asset level. The following sets out a number of key factors by asset type and how they have been
flexed to derive reasonable alternative valuations.
Lifetime mortgages
Key assumptions used in the valuation of lifetime mortgage assets are listed in Note 13(ii)(b) and sensitivities are applied to each assumption
which are used to derive the values in the above table. The most significant increase in value is a 20bps reduction in the discount rate which,
applied in isolation produces a sensitised value of \u00a3134m. The most significant decrease in value is a 20bps increase in the discount rate
which, applied in isolation produces a sensitised value of \u00a3(130)m.
Private credit portfolios
The sensitivity in the private credit portfolio has been determined through a method which estimates investment spread value premium
differences as compared to the institutional investment market. Individual investment characteristics of each holding, such as credit rating
and duration are used to determine spread differentials for the purposes of determining alternate values. Spread differentials are determined
to be lower for highly rated and/or shorter duration assets as compared to lower rated and/or longer duration assets. A significant component of
the spread differential is in relation to the selection of comparator bonds, which is the potential difference in spread of the basket of relevant
comparators determined by respective investors. If we were to take an AA rated asset it may attract a spread differential of 30bps on the
selection of comparator bonds as opposed to 45bps for a similar duration BBB rated asset. Applied in isolation the sensitivity used to reflect
the spread in comparator bond selection results in sensitised values of \u00a3260m and \u00a3(260)m.
Investment property
Investment property holdings are valued by independent valuers on the basis of open market value as defined in the appraisal and valuation
manual of the Royal Institute of Chartered Surveyors (RICS). As such, sensitivities are calculated through a mixture of asset level and portfolio
level methodologies which make reference to individual investment characteristics of the holding but do not flex individual assumptions
used by the independent expert in valuing the holdings. Valuation uncertainty is assessed using three methodologies that are each applied
independently and then weighted equally to determine the overall portfolio sensitivity: (i) acceptable margin of error approach reflecting
real asset valuation specialists view on uncertainty, (ii) an fixed income approach that derives sensitivities for each asset using duration,
credit rating and inflation linkage to determine asset\u2011specific stress factors and (iii) a property yield approach that flexes valuation yields by
reference to remaining term and credit rating (for example, AA rated asset with remaining term of 25 years in normal market conditions this
would lead to a 15bps yield flex as opposed to a 35bps yield flex for a BBB rated asset with a 30 year remaining term). While these three
methodologies are combined to produce a weighted average sensitivity on Sales and Leaseback and Build to Rent portfolio. Other portfolios
apply margin of error sensitivity.
The methodology which leads to the most significant sensitivity at the balance sheet date is an acceptable margin of error reflecting real
asset valuation specialists view on uncertainty of 10% either way, subject to the valuation being undertaken with due care. If this sensitivity
were to be taken without a weighting it would produce sensitised values of \u00a3587m and \u00a3(587)m.
It should be noted that some sensitivities described above are non-linear and larger or smaller impacts should not be interpolated or
extrapolated from these results.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentPropertyExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-664": { "value": "
13. Financial investments and investment property
Shareholder
Unit linked
Total
2025
2025
2025
Financial investments at fair value classified as:
Note
\u00a3m
\u00a3m
\u00a3m
Fair value through profit or loss1
79,987
380,470
460,457
Fair value through other comprehensive income
1,857
\u2013
1,857
Fair value through profit or loss - derivatives1
41,625
2,704
44,329
Loans at fair value through profit or loss 1
1,070
5,897
6,967
Financial investments at fair value
13(i)
124,539
389,071
513,610
Debt securities at amortised cost
7,973
\u2013
7,973
Loans at amortised cost
194
\u2013
194
Total financial investments
132,706
389,071
521,777
Investment property
6,839
4,797
11,636
Total financial investments and investment property
139,545
393,868
533,413
Expected to be recovered within 12 months
39,173
Expected to be recovered after 12 months
494,240
Shareholder
Unit linked
Total
2024
2024
2024
Financial investments at fair value classified as:
Note
\u00a3m
\u00a3m
\u00a3m
Fair value through profit or loss1
79,233
346,753
425,986
Fair value through other comprehensive income
1,922
\u2013
1,922
Fair value through profit or loss - derivatives1
49,195
1,997
51,192
Loans at fair value through profit or loss 1
2,630
4,772
7,402
Financial investments at fair value
13(i)
132,980
353,522
486,502
Debt securities at amortised cost
8,965
\u2013
8,965
Loans at amortised cost
84
\u2013
84
Total financial investments
142,029
353,522
495,551
Investment property
5,955
3,867
9,822
Total financial investments and investment property
147,984
357,389
505,373
Expected to be recovered within 12 months
36,632
Expected to be recovered after 12 months
468,741
1. Mandatorily measured at fair value through profit or loss.
Investment risks on unit linked assets are borne by the policyholders. The remaining risks associated with financial investments are outlined
in\u00a0Note 9.
Financial investments and Cash and cash equivalents (Note 16) together include:
\u2022 \u00a32,670m (2024: \u00a32,755m) of assets pledged as collateral against net derivative liability counterparty positions. The assets used as
collateral are Treasury Gilts, Foreign Government Bonds, AAA, AA, A and BBB Corporate Bonds and Cash ( 2024: Treasury Gilts, Foreign
Government Bonds, AAA, AA, A and BBB Corporate Bonds and Cash) having a residual maturity of over 79 years ( 2024: over 32 years).
\u2022 \u00a34,541m (2024: \u00a35,377m) of assets pledged as collateral in relation to various pension risk transfer deals. The assets used as collateral
are\u00a0Treasury Gilts, AAA to BBB Corporate Bonds and Cash (2024: Treasury Gilts, AAA to BBB Corporate Bonds and Cash) having a
residual maturity of over 44 years (2024: over 45 years).
\u2022 \u00a3839m (2024: \u00a3904m) of assets pledged in respect of longevity swaps with reinsurance counterparties. The assets used as collateral are
Treasury Gilts and AAA to AA Corporate Bonds (2024: Treasury Gilts, AAA to AA Corporate Bonds) having a residual maturity of over
61 years (2024: over 61 years).
While pledged as collateral, the Group is entitled to receive all of the cash flows from the assets above and there is no obligation to pay or
transfer cash flows arising from them to another entity. These assets are neither past due, nor impaired. The carrying value reflects the full
exposure of these assets.
The Group is permitted to sell or repledge collateral as per the International Swap Dealers Association agreements in place, including where
there has been no default by the owner of the collateral. As at 31 December 2025, the Group had repledged cash collateral with a fair value of
\u00a3447m (2024: \u00a3704m) in order to fulfil other collateral requirements in relation to derivatives contracts. The counterparties have an obligation
to return the\u00a0cash collateral to the Group. There are no other significant terms and conditions associated with the use of this cash collateral.
Financial investments include \u00a320,216m (2024: \u00a322,117m) of assets that have been sold but not derecognised and are subject to repurchase
agreements. Risks and rewards of these assets have been retained within the Group. The related obligation to repurchase the financial
assets is included within Payables and other financial liabilities (Note 26).
Financial investments have been allocated between those expected to be settled within 12 months and after 12 months in line with the
expected settlement of the backed liabilities. Assets in excess of the insurance and investment contract liabilities have been classified as
expected to be settled after 12 months.
(i) Financial investments and investment property at fair value
Shareholder
Unit linked
Total
2025
2025
2025
Notes
\u00a3m
\u00a3m
\u00a3m
Equity securities
2,072
232,472
234,544
Debt securities
79,772
147,998
227,770
Derivative assets
14
41,625
2,704
44,329
Loans at fair value
13(ii)
1,070
5,897
6,967
Financial investments
124,539
389,071
513,610
Investment property
6,839
4,797
11,636
Total financial investments at fair value
131,378
393,868
525,246
Shareholder
Unit linked
Total
2024
2024
2024
Notes
\u00a3m
\u00a3m
\u00a3m
Equity securities
2,948
198,342
201,290
Debt securities
78,207
148,411
226,618
Derivative assets
14
49,195
1,997
51,192
Loans at fair value
13(ii)
2,630
4,772
7,402
Financial investments
132,980
353,522
486,502
Investment property
5,955
3,867
9,822
Total financial investments at fair value
138,935
357,389
496,324
Included within unit linked equity securities are \u00a3109m (2024: \u00a3121m) of debt instruments which incorporate an embedded derivative linked
to the value of the Group\u2019s share price.
(ii) Fair value hierarchy
The table below breaks down the fair value of financial investments and investment property by fair value hierarchy level.
Total
Level 1
Level 2
Level 3
As at 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Shareholder
Equity securities
2,072
538
\u2013
1,534
Debt securities
79,772
43,247
16,425
20,100
Derivative assets
41,625
1
41,624
\u2013
Loans at fair value
1,070
\u2013
1,070
\u2013
Investment property
6,839
\u2013
\u2013
6,839
Total Shareholder
131,378
43,786
59,119
28,473
Unit linked
Equity securities
232,472
229,627
3
2,842
Debt securities
147,998
102,976
42,920
2,102
Derivative assets
2,704
43
2,661
\u2013
Loans at fair value
5,897
\u2013
5,897
\u2013
Investment property
4,797
\u2013
\u2013
4,797
Total Unit linked
393,868
332,646
51,481
9,741
Total financial investments and investment property at fair value
525,246
376,432
110,600
38,214
Debt securities at amortised cost1
6,930
\u2013
43
6,887
Loans at amortised cost 1
194
1
\u2013
193
1. This table includes debt securities and loans which are held at amortised cost on the Consolidated Balance Sheet at a total value of \u00a38,167m.
Total
Level 1
Level 2
Level 3
As at 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Shareholder
Equity securities
2,948
960
170
1,818
Debt securities
78,207
31,714
25,424
21,069
Derivative assets
49,195
7
49,188
\u2013
Loans at fair value
2,630
\u2013
2,630
\u2013
Investment property
5,955
\u2013
\u2013
5,955
Total Shareholder
138,935
32,681
77,412
28,842
Unit linked
Equity securities
198,342
197,532
1
809
Debt securities
148,411
97,799
49,269
1,343
Derivative assets
1,997
84
1,913
\u2013
Loans at fair value
4,772
\u2013
4,772
\u2013
Investment property
3,867
\u2013
\u2013
3,867
Total Unit Linked
357,389
295,415
55,955
6,019
Total financial investments and investment property at fair value
496,324
328,096
133,367
34,861
Debt securities at amortised cost1
7,847
\u2013
43
7,804
Loans at amortised cost 1
84
1
\u2013
83
1. This table includes debt securities and loans which are held at amortised cost on the Consolidated Balance Sheet at a total value of \u00a3 9,049m.
The levels of fair value measurement bases are defined as follows:
\u2022 Level 1: fair values measured using quoted prices (unadjusted) in active markets for identical assets or liabilities.
\u2022 Level 2: fair values measured using valuation techniques for all inputs significant to the measurement other than quoted prices included
within\u00a0Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
\u2022 Level 3: fair values measured using valuation techniques for any input for the asset or liability significant to the measurement that is not
based on\u00a0observable market data (unobservable inputs).
(a) Level 2 assets measured at fair value
All of the Group\u2019s Level 2 assets have been valued using standard market pricing sources, such as IHS Markit, ICE and Bloomberg, or Index
Providers such as Barclays, Merrill Lynch or JPMorgan. Each uses mathematical modelling and multiple source validation in order to
determine consensus prices, with the exception of OTC Derivative holdings; OTCs are marked to market using an in-house system (Lombard
Oberon), external vendor (IHS Markit), internal model or Counterparty Broker marks. In normal market conditions, we would consider these
market prices\u00a0to\u00a0be observable market prices. Following consultation with our pricing providers and a number of their contributing brokers,
we have considered that these prices are not from a suitably active market and have therefore classified them as Level 2.
The Group\u2019s policy is to re-assess categorisation of financial assets at the end of each reporting period and to recognise transfers between
levels\u00a0at that point in time. At 31 December 2025 debt securities totalling net \u00a310bn (2024: \u00a314bn) transferred from Level 2 to Level 1 in
the fair\u00a0value hierarchy.
(b) Level 3 assets measured at fair value
Level 3 assets, where modelling techniques are used, comprise property, unquoted securities, untraded debt securities and securities
where unquoted prices are provided by a single broker. Unquoted securities include suspended securities, investments in private equity
and property vehicles. Untraded debt securities include private placements, commercial real estate loans, income strips, retirement interest
only and other lifetime mortgages.
In many situations, inputs used to measure the fair value of an asset or liability may fall into different levels of the fair value hierarchy.
In\u00a0these situations, the Group determines the level in which the fair value falls based upon the lowest level input that is significant to
the\u00a0determination of\u00a0the fair value. As a result, both observable and unobservable inputs may be used in the determination of fair values
that\u00a0the Group has classified\u00a0within Level 3.
The Group determines the fair values of certain financial assets and liabilities based on quoted market prices, where available. The Group
also determines fair value based on estimated future cash flows discounted at the appropriate current market rate. As appropriate, fair
values reflect adjustments for counterparty credit quality, the Group\u2019s credit standing, liquidity and risk margins on unobservable inputs.
Fair values are subject to a control framework designed to ensure that input variables and outputs are assessed independent of the risk
taker. These inputs and outputs are reviewed and approved by a valuation committee and validated independently as appropriate.
Equity
securities
Other
financial
investments
Investment
property
Total
Equity
securities
Other
financial
investments
Investment
property
Total
2025
2025
2025
2025
2024
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
As at 1 January
2,627
22,412
9,822
34,861
2,392
20,463
8,893
31,748
Transfer to held for sale
(89)
(3,024)
\u2013
(3,113)
\u2013
\u2013
\u2013
\u2013
Total gains/(losses) for the year:
Realised gains or (losses) 1
4
(11)
(64)
(71)
4
(17)
(2)
(15)
Unrealised gains or (losses) 1
(109)
66
156
113
(208)
(278)
(20)
(506)
Purchases/Additions
2,295
5,581
2,007
9,883
789
5,649
1,502
7,940
Sales/Disposals
(301)
(3,098)
(264)
(3,663)
(364)
(3,369)
(552)
(4,285)
Transfers into Level 3
48
320
\u2013
368
\u2013
70
\u2013
70
Transfers out of Level 3
(92)
(36)
\u2013
(128)
\u2013
(144)
\u2013
(144)
Foreign exchange rate movements
(7)
(8)
(21)
(36)
14
38
1
53
As at 31 December
4,376
22,202
11,636
38,214
2,627
22,412
9,822
34,861
1. Realised and unrealised gains/(losses) are recognised in Investment return in the Consolidated Income Statement.
The breakdown below includes assets which are disclosed in Assets of operations classified as held for sale in the Consolidated Balance
Sheet where applicable.
Equity securities
Level 3 equity securities amount to \u00a34,487m (2024: \u00a32,627m), of which the majority is made up of holdings in investment property vehicles
and\u00a0private investment funds. They are valued at the proportion of the Group\u2019s holding of the Net Asset Value reported by the investment
vehicles.\u00a0Other equity securities are valued by a number of third-party specialists using a range of techniques which are often dependent on
the\u00a0maturity of\u00a0the underlying investment but can also depend on the characteristics of individual assets. Such techniques include transaction
values underpinned by analysis of milestone achievement and cash runway for early/start-up stage investments, discounted cash flow
models for\u00a0investments at the next stage of development and earnings multiples for more mature investments.
Other financial investments
Lifetime mortgage (LTM) loans and retirement interest only mortgages amount to \u00a35,756m (2024: \u00a35,861m). Lifetime mortgages are valued
using a discounted cash flow model by projecting best estimate net asset proceeds and discounted using rates inferred from current LTM
loan pricing. The inferred illiquidity premiums for the majority of the portfolio range between 150 and 250bps. (2024: between 150 and
250bps). This\u00a0ensures the value of loans at outset is consistent with the purchase price of the loan and achieves consistency between new
and in-force loans. Lifetime mortgages include a no negative equity guarantee (NNEG) to borrowers. This ensures that if there is a shortfall
between the\u00a0sale proceeds of the property and the outstanding loan balance on redemption of the loan, the value of the loan will be reduced
by this amount. The NNEG on loan redemption is valued as a series of put\u00a0options, which we calculate using a variant of the Black-Scholes
formula. Key assumptions in the valuation of lifetime mortgages include short-term and long-term property growth rates, property index
volatility, voluntary early repayments and longevity assumptions. The valuation as\u00a0at 31 December 2025 reflects a combination of short-
term and long-term property growth rate assumptions equivalent to a flat rate of 3.5% annually (2024: 3.4% annually), after allowing for
the effects of dilapidation. The values of the properties collateralising the LTM loans are updated from the date of the last property valuation
to the valuation date by indexing using UK regional house price indices.
Private credit loans (including commercial real estate loans) amount to \u00a314,511m (2024: \u00a311,779m). Their valuation is determined by
discounted future cash flows which are based on the market yield and spread of the Asset Management approved comparable bonds
and the initial transaction spread, both of which are agreed by S&P Global who also provide an independent verification of the selection of
the comparable bonds. Unobservable inputs that go into the determination of\u00a0comparators include rating, sector, sub-sector, performance
dynamics, financing structure and duration of investment. Existing private credit investments, which were executed as far back as 2011, are
subject to a range of interest rate formats, although the majority are fixed rate. The weighted average duration of the portfolio is 7.0 years
(2024: 7.6 years), with a weighted average life of 10.0 years (2024: 11.0 years). Maturities in the portfolio currently extend out\u00a0to\u00a02074
(2024: to 2074). The private credit portfolio of assets has internal ratings assigned by an independent credit team in line with internally
developed methodologies. These credit ratings range from AAA to BB- (2024: AAA to BB-).
Private placements, all of which relate to held for sale assets, amount to \u00a32,579m (2024: \u00a32,181m). They are valued using a pricing matrix
comprised of a public spread matrix, internal ratings assigned to each holding, average life of each holding and a premium spread matrix. These
are added to the risk-free rate to calculate the discounted cash flows and establish a market value for each investment grade private placement.
Income strip assets amount to \u00a31,272m (2024: \u00a31,280m). Their valuation is outsourced to CBRE who apply a yield to maturity to\u00a0discounted
future cash flows to derive valuations. The overall valuation takes into account the property location, tenant details, tenure, rent, rental break
terms, lease expiries and underlying residual value of the property. The valuation as at 31 December 2025 reflects equivalent yield ranges
between 3% and 18% (2024: between 2% to 17%) and estimated rental values (ERV) between \u00a31 and \u00a326 per sq.ft
(2024: between \u00a37 and \u00a3367 per sq.ft).
Commercial mortgage loans, all of which relate to held for sale assets, amount to \u00a3795m (2024: \u00a3843m) and are determined by incorporating
credit risk for performing loans at the portfolio level and adjusted for loans identified to be distressed at the loan level. The projected cash flows
of each loan are discounted along stochastic risk-free rate paths and are inclusive of an Option Adjusted Spread (OAS), derived from current
internal pricing on new loans, along with\u00a0the best observable inputs.
Other debt securities which are not traded in an active market amount to \u00a3663m (2024: \u00a3468m). They have been valued using third-party
or\u00a0counterparty valuations and these prices are considered to be unobservable due to infrequent market transactions.
Investment property
Level 3 investment property amounting to \u00a311,636m (2024: \u00a39,822m) is valued with the involvement of external valuers. All property
valuations in\u00a0the UK are carried out in accordance with the latest edition of the Valuation Standards published by the Royal Institute of
Chartered Surveyors and are undertaken by appropriately qualified valuers as defined therein. Outside the UK, valuations are produced in
conjunction with external qualified professional values in the countries concerned. Whilst transaction evidence underpins the valuation
process, the definition of market value, including the commentary, in practice requires the valuer to reflect the realities of the current market.
In this context, valuers must use their market\u00a0knowledge and professional judgement and not rely only upon market sentiment based on
historic transactional comparables.
The valuation of investment properties also includes an income approach that is based on current rental income plus anticipated uplifts,
where\u00a0the uplift and discount rates are derived from rates implied by recent market transactions. These inputs are deemed unobservable.
The\u00a0valuation as at 31 December 2025 reflects equivalent yield ranges between 1% and 53% (2024: between 1% and 53%) and Estimated
Rental Value (ERV) between \u00a31 and \u00a3219 per sq.ft (2024: between \u00a32 and \u00a3369 per sq.ft).
The table below shows the valuation of investment property by sector:
2025
2024
\u00a3m
\u00a3m
Retail
1,351
1,242
Leisure
580
493
Distribution
1,279
1,058
Office Space
3,267
2,876
Industrial and other commercial
2,306
1,805
Accommodation
2,853
2,348
Total investment property
11,636
9,822
c) Effect of changes in assumptions on Level 3 assets
Fair values of financial instruments are, in certain circumstances, measured using valuation techniques that incorporate assumptions that are
not\u00a0evidenced by prices from observable current market transactions in the same instrument and are not based on observable market data.
Where material, the Group assesses the sensitivity of fair values of Level 3 investments to changes in unobservable inputs to reasonable
alternative assumptions. The table below shows the impact of applying these sensitivities to the fair value of Level 3 assets as at
31 December 2025, including assets which are part of operations classified as held for sale. Further disclosure on how these sensitivities
have been applied can be found in the descriptions following the table.
Sensitivities
Fair value 2025
Positive impact
Negative impact
\u00a3m
\u00a3m
\u00a3m
Lifetime mortgages
5,756
204
(246)
Private credit portfolios
17,885
756
(756)
Investment property
11,636
943
(926)
Other investments1
6,422
396
(479)
Total Level 3 assets
41,699
2,299
(2,407)
1. Other investments include Level 3 equity securities, income strip assets and other traded debt securities which are Level 3.
The sensitivities are not a function of sensitising a single variable relating to the valuation of the asset, but rather a function of flexing
multiple factors often at individual asset level. The following sets out a number of key factors by asset type and how they have been
flexed to derive reasonable alternative valuations.
Lifetime mortgages
Key assumptions used in the valuation of lifetime mortgage assets are listed in Note 13(ii)(b) and sensitivities are applied to each assumption
which are used to derive the values in the above table. The most significant increase in value is a 20bps reduction in the discount rate which,
applied in isolation produces a sensitised value of \u00a3134m. The most significant decrease in value is a 20bps increase in the discount rate
which, applied in isolation produces a sensitised value of \u00a3(130)m.
Private credit portfolios
The sensitivity in the private credit portfolio has been determined through a method which estimates investment spread value premium
differences as compared to the institutional investment market. Individual investment characteristics of each holding, such as credit rating
and duration are used to determine spread differentials for the purposes of determining alternate values. Spread differentials are determined
to be lower for highly rated and/or shorter duration assets as compared to lower rated and/or longer duration assets. A significant component of
the spread differential is in relation to the selection of comparator bonds, which is the potential difference in spread of the basket of relevant
comparators determined by respective investors. If we were to take an AA rated asset it may attract a spread differential of 30bps on the
selection of comparator bonds as opposed to 45bps for a similar duration BBB rated asset. Applied in isolation the sensitivity used to reflect
the spread in comparator bond selection results in sensitised values of \u00a3260m and \u00a3(260)m.
Investment property
Investment property holdings are valued by independent valuers on the basis of open market value as defined in the appraisal and valuation
manual of the Royal Institute of Chartered Surveyors (RICS). As such, sensitivities are calculated through a mixture of asset level and portfolio
level methodologies which make reference to individual investment characteristics of the holding but do not flex individual assumptions
used by the independent expert in valuing the holdings. Valuation uncertainty is assessed using three methodologies that are each applied
independently and then weighted equally to determine the overall portfolio sensitivity: (i) acceptable margin of error approach reflecting
real asset valuation specialists view on uncertainty, (ii) an fixed income approach that derives sensitivities for each asset using duration,
credit rating and inflation linkage to determine asset\u2011specific stress factors and (iii) a property yield approach that flexes valuation yields by
reference to remaining term and credit rating (for example, AA rated asset with remaining term of 25 years in normal market conditions this
would lead to a 15bps yield flex as opposed to a 35bps yield flex for a BBB rated asset with a 30 year remaining term). While these three
methodologies are combined to produce a weighted average sensitivity on Sales and Leaseback and Build to Rent portfolio. Other portfolios
apply margin of error sensitivity.
The methodology which leads to the most significant sensitivity at the balance sheet date is an acceptable margin of error reflecting real
asset valuation specialists view on uncertainty of 10% either way, subject to the valuation being undertaken with due care. If this sensitivity
were to be taken without a weighting it would produce sensitised values of \u00a3587m and \u00a3(587)m.
It should be noted that some sensitivities described above are non-linear and larger or smaller impacts should not be interpolated or
extrapolated from these results.
41. Associates and joint ventures
Summarised financial information for associates and joint ventures accounted for under the equity method is shown below:
Associates
Joint ventures
Associates
Joint ventures
2025
2025
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Current assets
110
67
83
428
Non-current assets
2,204
415
1,722
740
Current liabilities
(34)
(30)
(61)
(143)
Non-current liabilities
(1,654)
\u2013
(1,056)
\u2013
Loss from continuing operations - total
(56)
(39)
(95)
(27)
Loss from continuing operations - Group's share
(24)
(20)
(40)
(14)
Total comprehensive expense - total
(56)
(42)
(95)
(27)
Total comprehensive expense - Group's share
(24)
(21)
(40)
(14)
The associates and joint ventures have no significant contingent liabilities to which the Group is exposed. The Group has no commitments to
provide funding to associates and joint ventures other than the ones included in Note 40.
During the year, the total value of Investment in associates and joint ventures accounted for using the equity method on the Group\u2019s
Consolidated Balance Sheet increased to \u00a3510m (2024: \u00a3872m), reflecting a number of additions and disposals, as well as the Group\u2019s
share of the profits and losses of the respective associates and joint ventures. The Group's share of profits or losses on associates and joint
ventures is disclosed in Other operational income on the Consolidated Income Statement.
42. Related undertakings
The Companies Act 2006 requires disclosure of information about the Group\u2019s subsidiaries, associates, joint ventures and other significant
holdings. Significant holdings are entities in which the Group either has a shareholding greater than or equal to 20% of the nominal value of
any\u00a0share class, or a book value greater than 20% of the Group\u2019s assets.
(i) Subsidiaries
The particulars of the Company\u2019s subsidiaries, mutual funds and partnerships that have been consolidated as at 31 December 2025 are
listed below, grouped by country of incorporation and registered office address. The main territory of operation of subsidiaries incorporated in
England and Wales is the UK. For overseas subsidiaries the principal country of operation is the same as the country of incorporation. All
subsidiaries are 100% owned, unless stated otherwise. All subsidiaries are held through intermediate holding companies unless noted that
they are held directly by the Company (marked with #). Subsidiaries that are consolidated where the Group owns less than 50% of the
ordinary share capital, are consolidated based on an assessment of\u00a0control normally arising from special rights attaching to the class of share
owned, other contractual arrangements and factors such as the purpose of the investee, the nature of its relevant activities, voting rights
(including potential voting rights) and substantive and protective rights.
The Group reassesses the appropriateness of the consolidation of an investee whenever facts and circumstances indicate that there has been
a\u00a0change in the relationship between the Group and the investee which affects control.
Company name
Share class
% of equity
shares held
by the Group
England and Wales
One Coleman Street, London, EC2R 5AA
30-31 Golden Square GP LLP
Partnership
100.0
30-31 Golden Square LP
Partnership
100.0
30-31 Golden Square Nominee 1 Limited
Ordinary
100.0
30-31 Golden Square Nominee 2 Limited
Ordinary
100.0
30-31 Golden Square Unit Trust
Unit
100.0
Antham 1 Limited
Ordinary
100.0
Begbroke Oxford Limited
Ordinary
100.0
Bonnington Residents Management Company
Limited
Limited by
guarantee
100.0
BQN Limited
Ordinary
100.0
Capital Hill Limited Partnership
Partnership
99.7
Cardiff Interchange Limited
Ordinary
100.0
Cardiff Interchange NomineeCo Limited
Ordinary
100.0
Court Place Gardens Holdings LLP
Partnership
100.0
Court Place Gardens Oxford Limited
Ordinary
100.0
Finovation UK Limited
Ordinary
100.0
Halesworth Lanecroft Partners GP LLP
Partnership
100.0
Halesworth Lanecroft Partners LP
Partnership
100.0
Haut Investments 2 Limited
Ordinary
100.0
Haut Investments Limited
Ordinary
100.0
Interchange Central Square (General Partner)
Limited
Ordinary
100.0
Interchange Central Square Limited Partnership
Partnership
100.0
Investment Discounts On Line Limited
Ordinary
100.0
IPIF Trade General Partner Limited
Ordinary
100.0
IPIF Trade Nominee Limited
Ordinary
100.0
IXDS Limited
Ordinary
70.0
L&G - Asset Management Limited#
Ordinary
100.0
L&G Affordable Housing Access GP Limited
Ordinary
100.0
L&G Affordable Housing Access LGPS LP
Partnership
100.0
L&G Affordable Housing GP Limited
Ordinary
100.0
L&G Affordable Housing LP
Partnership
100.0
Company name
Share class
% of equity
shares held
by the Group
L&G Affordable Housing Northern GP Limited
Ordinary
100.0
L&G Affordable Housing Northern LGPS LP
Ordinary
100.0
L&G Annuity S&L GP Limited
Ordinary
100.0
L&G Buy & Maintain Short Dated Credit Fund
Ordinary
100.0
L&G Cash Trust
Unit
38.5
L&G Coleman Holdco Ltd
Ordinary
100.0
L&G Digital Infrastructure Co-Invest Holding 1 Ltd
Ordinary
100.0
L&G Digital Infrastructure Co-Invest Holding 2 Ltd
Ordinary
100.0
L&G Digital Infrastructure Holding 2 Ltd
Ordinary
100.0
L&G Digital Infrastructure Holding Ltd
Ordinary
100.0
L&G Future World Global Opportunities Fund
Unit
33.7
L&G Healthcare Plan Trustee Limited
Ordinary
100.0
L&G Herne Hill Holdco GP LLP
Partnership
100.0
L&G Herne Hill Holdco Nominee Limited
Ordinary
100.0
L&G Hillview Place Propco Limited
Ordinary
100.0
L&G Hotel Edinburgh Propco Limited
Ordinary
100.0
L&G Hotel Leeds Propco Limited
Ordinary
100.0
L&G Kao Holdco Ltd
Ordinary
100.0
L&G Lower Gilmore Place Propco Ltd
Ordinary
100.0
L&G Managed Fund Property Unit Trust
Unit
99.9
L&G Multi Asset Core 20 Fund
Unit
83.0
L&G Multi Asset Core 45 Fund
Unit
48.5
L&G Multi Asset Core 75 Fund
Unit
53.2
L&G Multi-Asset Target Return Fund
Unit
47.5
L&G Multifamily LLP
Partnership
100.0
L&G Nature Investments Limited
Ordinary
100.0
L&G Property Europe Limited
Ordinary
100.0
L&G UK Smaller Companies Trust
Unit
33.1
Lanecroft Homes Limited
Ordinary
100.0
Legal & General (Portfolio Management
Services) Limited
Ordinary
100.0
Legal & General (Portfolio Management
Services) Nominees Limited
Ordinary
100.0
Legal & General (Strategic Land Harpenden)
Limited
Ordinary
100.0
Company name
Share class
% of equity
shares held
by the Group
Legal & General (Strategic Land North
Horsham) Limited
Ordinary
100.0
Legal & General (Strategic Land) Limited
Ordinary
100.0
Legal & General (Unit Trust Managers) Limited
Ordinary
100.0
Legal & General (Unit Trust Managers)
Nominees Limited
Ordinary
100.0
Legal & General Affordable Homes (AR) LLP
Partnership
100.0
Legal & General Affordable Homes
(Development 2) Limited
Ordinary
100.0
Legal & General Affordable Homes
(Development) Limited
Ordinary
100.0
Legal & General Affordable Homes (Investment
1) Limited
Ordinary
100.0
Legal & General Affordable Homes (Investment
2) Limited
Ordinary
100.0
Legal & General Affordable Homes (Investment
3) Limited
Ordinary
100.0
Legal & General Affordable Homes
(Operations) Limited
Ordinary
100.0
Legal & General Affordable Homes (SO) LLP
Partnership
100.0
Legal & General Affordable Homes Limited
Ordinary
100.0
Legal & General Bristol Temple Island Estate
Management Company Limited
Ordinary
100.0
Legal & General Capital Investments Limited#
Ordinary
100.0
Legal & General Co Sec Limited#
Ordinary
100.0
Legal & General Development Assets Holdings
Limited
Ordinary
100.0
Legal & General Digital Solutions Limited
Ordinary
100.0
Legal & General Employee Benefits
Administration Limited
Ordinary
100.0
Legal & General Estate Agencies Limited #
Ordinary
100.0
Legal & General Euro Mortgage No.1 SPV
Limited
Ordinary
100.0
Legal & General Euro Mortgage SPV LLP
Partnership
100.0
Legal & General Everest UK Holdco Limited
Ordinary
100.0
Legal & General Finance PLC#
Ordinary
100.0
Legal & General Financial Advice Limited
Ordinary
100.0
Legal & General FX Structuring (SPV) Limited
Ordinary
100.0
Legal & General GP LLP
Partnership
100.0
Legal & General Heat Pumps Limited
Ordinary
100.0
Legal & General Home Finance Holding
Company Limited
Ordinary
100.0
Legal & General Home Finance Limited
Ordinary
100.0
Legal & General Homes (Services Co) Limited
Ordinary
100.0
Legal & General Homes Holdings Limited
Ordinary
100.0
Legal & General Homes Modular Limited
Ordinary
100.0
Legal & General Insurance Holdings Limited
Ordinary
100.0
Legal & General Insurance Holdings No. 2
Limited#
Ordinary
100.0
Legal & General Investment Management
Limited
Ordinary
100.0
Company name
Share class
% of equity
shares held
by the Group
Legal & General Later Living Limited
Ordinary
100.0
Legal & General Leisure Fund Trustee Limited
Ordinary
100.0
Legal & General Life Fund Limited Partnership
Partnership
100.0
Legal & General LTM Structuring (SPV) Limited
Ordinary
100.0
Legal & General Middle East Limited#
Ordinary
100.0
Legal & General Overseas Operations Limited#
Ordinary
100.0
Legal & General Partnership Holdings Limited #
Ordinary
100.0
Legal & General Partnership Services Limited
Ordinary
100.0
Legal & General Pension Fund Trustee Limited
Ordinary
100.0
Legal & General Pension Scheme Trustee
Limited
Ordinary
100.0
Legal & General Pensions Limited
Ordinary
100.0
Legal & General Property Limited
Ordinary
100.0
Legal & General Property Partners (Industrial
Fund) Limited
Ordinary
100.0
Legal & General Property Partners (Industrial)
Nominees Limited
Ordinary
100.0
Legal & General Property Partners (IPIF GP) LLP
Partnership
100.0
Legal & General Property Partners (Leisure GP)
LLP
Partnership
100.0
Legal & General Property Partners (Leisure)
Limited
Ordinary
100.0
Legal & General Property Partners (Life Fund)
Limited
Ordinary
100.0
Legal & General Property Partners (Life Fund)
Nominee Limited
Ordinary
100.0
Legal & General Property Partners (UK PIF
Geared) Limited
Ordinary
100.0
Legal & General Property Partners (UK PIF)
Limited
Ordinary
100.0
Legal & General Property Partners (UKPIF
Geared Two) Limited
Ordinary
100.0
Legal & General Property Partners (UKPIF Two)
Limited
Ordinary
100.0
Legal & General Re Holdings Limited#
Ordinary
100.0
Legal & General Residential (Holdco) Limited
Ordinary
100.0
Legal & General Resources Limited#
Ordinary
100.0
Legal & General Retail Investments (Holdings)
Limited #
Ordinary
100.0
Legal & General SBTR (Ashdown House 1)
Limited
Ordinary
100.0
Legal & General SBTR (Ashdown House 2)
Limited
Ordinary
100.0
Legal & General SBTR (Crowthorne 1) Limited
Ordinary
100.0
Legal & General SBTR (Crowthorne 2) Limited
Ordinary
100.0
Legal & General SBTR (Keresley 1) Limited
Ordinary
100.0
Legal & General SBTR (Keresley 2) Limited
Ordinary
100.0
Legal & General SBTR (Sandy Lane 1) Limited
Ordinary
100.0
Legal & General SBTR (Sandy Lane 2) Limited
Ordinary
100.0
Legal & General SBTR (St Neots) Limited
Ordinary
100.0
Company name
Share class
% of equity
shares held
by the Group
Legal & General SBTR (Stanton Cross 1)
Limited
Ordinary
100.0
Legal & General SBTR (Stanton Cross 2)
Limited
Ordinary
100.0
Legal & General SBTR (Stanton Cross 3)
Limited
Ordinary
100.0
Legal & General SBTR (Stanton Cross 4)
Limited
Ordinary
100.0
Legal & General Science and Tech (Holdings)
Limited
Ordinary
100.0
Legal & General Senior Living Limited
Ordinary
100.0
Legal & General SPV (HoldCo) Limited
Ordinary
100.0
Legal & General Student Living LLP
Partnership
99.9
Legal & General Suburban BTR (Development
2) Limited
Ordinary
100.0
Legal & General Suburban BTR (Development)
Limited
Ordinary
100.0
Legal & General Suburban BTR (Operations)
Limited
Ordinary
100.0
Legal & General Suburban BTR (Property) LLP
Partnership
100.0
Legal & General Trustees Limited
Ordinary
100.0
Legal & General UK BTR GP LLP
Partnership
100.0
Legal & General UK BTR GP Three LLP
Partnership
100.0
Legal & General UK BTR Investment GP LLP
Partnership
100.0
Legal & General UK BTR Investment Nominee
Limited
Ordinary
100.0
Legal & General UK PIF Two GP LLP
Partnership
100.0
Legal & General UK Solar Investments
(Holdings) Limited
Ordinary
100.0
Legal & General UK Structuring SPV LLP
Partnership
100.0
Legal and General Affordable Homes
(Development 3) Limited
Ordinary
100.0
Legal and General Assurance (Pensions
Management) Limited
Ordinary
100.0
Legal and General Assurance Society Limited
Ordinary
100.0
Legal and General Bristol Temple Island
Limited
Ordinary
100.0
Legal and General Capital IM Company Limited
Ordinary
100.0
Legal and General Residential (BTR) 1 LLP
Partnership
99.5
Legal and General Residential (BTR) 2 LLP
Partnership
99.5
LGC 150 Richmond UK Holdco Limited
Ordinary
100.0
LGC 265 S. Orange UK Holdco Limited
Ordinary
100.0
LGC Overseas Holdco Limited
Ordinary
100.0
LGC TEP UK Holdco Limited
Ordinary
100.0
LGGP ECF (GP) LLP
Partnership
100.0
LGGP ECF 1 L.P.
Partnership
100.0
LGGP Holdings Limited
Ordinary
100.0
LGGP Investments 1 Limited
Ordinary
100.0
LGGP Management Limited
Ordinary
100.0
LGGP Nominee 1 Limited
Ordinary
100.0
Company name
Share class
% of equity
shares held
by the Group
LGGP Nominee 2 Limited
Ordinary
100.0
LGIM Commercial Lending Limited
Ordinary
100.0
LGIM International Limited
Ordinary
100.0
LGIM Real Assets (Operator) Limited
Ordinary
100.0
LGIM Real Assets Limited
Ordinary
100.0
LGIM Sustainable DC Property Fund
Ordinary
100.0
LGP Newco Limited
Ordinary
100.0
LGPL No.2 Limited
Ordinary
100.0
Life and Mind Building Oxford Limited
Ordinary
100.0
Nest Residential GP LLP
Partnership
100.0
NSC Building A Limited
Ordinary
100.0
NSC Building B Limited
Ordinary
100.0
Parity Energy Storage Limited
Ordinary
80.0
Performance Retail (General Partner) Limited
Ordinary
100.0
Performance Retail (Nominee) Limited
Ordinary
100.0
Performance Retail Limited Partnership
Partnership
100.0
PRLP GP LLP
Partnership
100.0
Rowley Lane Borehamwood Limited
Ordinary
100.0
Senior Living Medici Holdco Limited
Ordinary
100.0
Senior Living Medici Limited
Ordinary
100.0
Senior Living Urban (Bath) Limited
Ordinary
100.0
Senior Living Urban (Epsom) Limited
Ordinary
100.0
Senior Living Urban (Uxbridge) Limited
Ordinary
100.0
Senior Living Urban (Walton) Limited
Ordinary
100.0
Stratford City Offices (No. 2) General Partner
Limited
Partnership
100.0
Stratford City Offices (No. 2) Limited
Partnership
Partnership
99.8
Student Operations (Clifford) Limited
Ordinary
100.0
Student Operations (Scotway) Limited
Ordinary
100.0
Student Operations (The Place) Limited
Ordinary
100.0
Sunderland Vaux 1 Limited
Ordinary
100.0
The Place Nottingham Limited
Ordinary
100.0
The Springs Thorpe Park Limited
Ordinary
100.0
West Bar Square Limited
Ordinary
100.0
4th Floor Phoenix House, 1 Station Hill, Reading, Berkshire UK RG1 1NB
Proprium Capital Management (UK) LLP
Partnership
74.0
Proprium Capital Partners (UK) Limited
Ordinary
75.0
5 New Street Square, London, England, EC4A 3TW
Alfreton Solar Limited
Ordinary
100.0
Beavor Grange Solar Limited
Ordinary
100.0
Low Farm Solar Limited
Ordinary
100.0
Siddington Solar Farm Limited
Ordinary
100.0
North Point, Stafford Drive, Battlefield Enterprise Park, Shrewsbury,
England, SY1 3BF
Portholme Residents Management Company
Limited
Ordinary
100.0
Company name
Share class
% of equity
shares held
by the Group
The Old Post Office Station Road, Congresbury, Bristol, England, BS49
5DY
London Distribution Park Management
Company Limited
Ordinary
68.0
Bermuda
19 Par La Ville Road, Hamilton, HM11
L&G Reinsurance USA Limited
Ordinary
100.0
Legal & General America Reinsurance Limited
Ordinary
100.0
Legal & General Reinsurance Company Limited
Ordinary
100.0
Legal & General Reinsurance Company No.2
Limited
Ordinary
100.0
Legal & General Resources Bermuda Limited
Ordinary
100.0
Cayman Islands
Maples Corporate Services Limited, PO Box 309, Ugland House, Grand
Cayman, KY1-1104
Atlas Cayman JV GP Ltd
Ordinary
75.0
Casati II JV GP Ltd
Ordinary
75.0
Casati JV GP Ltd
Ordinary
75.0
Marmor Cayman JV GP Ltd
Ordinary
75.0
Proprium Capital Partners LP
Ordinary
class A
75.0
Proprium Cayman Ltd
Ordinary
75.0
Proprium Real Estate Special Situations Fund
GP Ltd
Ordinary
100.0
PSSF Alpha JV GP Ltd
Ordinary
75.0
China
Southwest Room, Floor 3, No. 2123 Pudong Avenue, (Shanghai) Pilot
Free Trade Zone (Bonded Area), Pudong District, Shanghai
Legal & General Business Consulting
(Shanghai) Limited
Ownership
dictated by
subscribed
capital
100.0
Hong Kong
10th Floor, Southland Building 48 Connaught Road Central Hong Kong
SAR
Proprium Capital Partners (Hong Kong) Limited
Ordinary
75.0
Room 902, 9th Floor, Chinachem Tower, 34-37 Connaught Road Central
Legal & General Investment Management Asia
Limited
Ordinary
100.0
Ireland
2 Grand Canal Square, Dublin 2, D02 A342
L&G ESG USD Corporate Bond UCITS ETF
Ordinary
53.1
L&G India INR Government Bond UCITS ETF
Ordinary
38.5
33 Sir John Rogerson's Quay, Dublin 2, D02 XK09
Euro Liquidity Fund
Ordinary
43.6
L&G Asia Bond Fund
Ordinary
100.0
L&G ESG Emerging Markets Government Bond
(USD) Index Fund
Ordinary
97.2
L&G Frontier Markets Equity Fund
Ordinary
43.2
L&G Future World Net Zero Buy & Maintain
Ordinary
100.0
Company name
Share class
% of equity
shares held
by the Group
L&G Future World Net Zero Maturing Buy &
Maintain Fund 23-32
Ordinary
100.0
L&G Future World Net Zero Maturing Buy &
Maintain Fund 33-42
Ordinary
100.0
L&G Global Government Bond Fund
Ordinary
100.0
L&G Net Zero Sterling Corporate Bond Fund
Ordinary
100.0
L&G New Energy Commodities UCITS ETF
Ordinary
78.9
L&G S&P 100 UCITS ETF
Ordinary
57.4
L&G US Corporate Bond Fund
Ordinary
100.0
LGIM (Ireland) Risk Management Solutions plc
Ordinary
100.0
LGIM 2030 Fixed Fund
Ordinary
100.0
LGIM 2030 Inflation Fund
Ordinary
100.0
LGIM 2030 Leveraged Index Linked Gilt Fund
Ordinary
100.0
LGIM 2030 Real Fund
Ordinary
100.0
LGIM 2034 Leveraged Gilt Fund
Ordinary
100.0
LGIM 2034 Leveraged Index Linked Gilt Fund
Ordinary
100.0
LGIM 2035 Fixed Fund
Ordinary
100.0
LGIM 2035 Inflation Fund
Ordinary
100.0
LGIM 2035 Real Fund
Ordinary
100.0
LGIM 2037 Leveraged Index Linked Gilt Fund
Ordinary
100.0
LGIM 2038 Leveraged Gilt Fund
Ordinary
100.0
LGIM 2040 Fixed Fund
Ordinary
100.0
LGIM 2040 Inflation Fund
Ordinary
100.0
LGIM 2040 Leveraged Index Linked Gilt Fund
Ordinary
100.0
LGIM 2040 Real Fund
Ordinary
100.0
LGIM 2042 Leveraged Gilt Fund
Ordinary
100.0
LGIM 2042 Leveraged Index Linked Gilt Fund
Ordinary
100.0
LGIM 2045 Fixed Fund
Ordinary
100.0
LGIM 2045 Inflation Fund
Ordinary
100.0
LGIM 2045 Leveraged Gilt Fund
Ordinary
100.0
LGIM 2045 Real Fund
Ordinary
100.0
LGIM 2047 Leveraged Index Linked Gilt Fund
Ordinary
100.0
LGIM 2049 Leveraged Gilt Fund
Ordinary
100.0
LGIM 2050 Fixed Fund
Ordinary
100.0
LGIM 2050 Inflation Fund
Ordinary
100.0
LGIM 2050 Leveraged Index Linked Gilt Fund
Ordinary
100.0
LGIM 2050 Real Fund
Ordinary
100.0
LGIM 2055 Fixed Fund
Ordinary
100.0
LGIM 2055 Leveraged Gilt Fund
Ordinary
100.0
LGIM 2055 Leveraged Index Linked Gilt Fund
Ordinary
100.0
LGIM 2055 Real Fund
Ordinary
100.0
LGIM 2060 Fixed Fund
Ordinary
100.0
LGIM 2060 Inflation Fund
Ordinary
100.0
LGIM 2060 Leveraged Gilt Fund
Ordinary
100.0
LGIM 2062 Leveraged Index Linked Gilt Fund
Ordinary
100.0
LGIM 2068 Leveraged Gilt Fund
Ordinary
100.0
Company name
Share class
% of equity
shares held
by the Group
LGIM 2068 Leveraged Index Linked Gilt Fund
Ordinary
100.0
LGIM 2073 Leveraged Gilt Fund
Ordinary
100.0
LGIM 2073 Leveraged Index Linked Gilt Fund
Ordinary
100.0
LGIM Bespoke Fund 1
Ordinary
100.0
LGIM Credit and Liquidity - Fund BM
Ordinary
100.0
LGIM Credit and Liquidity - Fund BN
Ordinary
100.0
LGIM Fixed Long Duration Fund
Ordinary
100.0
LGIM Fixed Short Duration Fund
Ordinary
100.0
LGIM Hedging Fund AC
Ordinary
100.0
LGIM Hedging Fund AI
Ordinary
100.0
LGIM Hedging Fund AR
Ordinary
100.0
LGIM Hedging Fund AS
Ordinary
100.0
LGIM Hedging Fund AW
Ordinary
100.0
LGIM Hedging Fund BG
Ordinary
100.0
LGIM Hedging Fund BJ
Ordinary
100.0
LGIM Hedging Fund BL
Ordinary
100.0
LGIM Hedging Fund BT
Ordinary
100.0
LGIM Hedging Fund CJ
Ordinary
100.0
LGIM Hedging Fund CK
Ordinary
100.0
LGIM Hedging Fund DC
Ordinary
100.0
LGIM Hedging Fund DJ
Ordinary
100.0
LGIM Hedging Fund DO
Ordinary
100.0
LGIM Hedging Fund L
Ordinary
100.0
LGIM Hedging Fund O
Ordinary
100.0
LGIM Hedging Fund WH
Ordinary
100.0
LGIM Hedging Fund WS
Ordinary
100.0
LGIM Hedging Fund WT
Ordinary
100.0
LGIM Hedging Fund ZZ
Ordinary
100.0
LGIM Leveraged Synthetic Equity Fund
Ordinary
100.0
LGIM Leveraged Synthetic Equity Fund - GBP
Currency Hedged Fund
Ordinary
100.0
LGIM Maturing Buy & Maintain Credit Fund
2025-2029
Ordinary
100.0
LGIM Maturing Buy & Maintain Credit Fund
2030-2034
Ordinary
100.0
LGIM Maturing Buy & Maintain Credit Fund
2035-2039
Ordinary
100.0
LGIM Maturing Buy & Maintain Credit Fund
2040-2054
Ordinary
100.0
LGIM Real Long Duration Fund
Ordinary
100.0
LGIM Real Short Duration Fund
Ordinary
100.0
LGIM Solutions Fund BB
Ordinary
100.0
LGIM Solutions Fund BK
Ordinary
100.0
LGIM Solutions Fund BW
Ordinary
100.0
LGIM Solutions Fund CA
Ordinary
100.0
LGIM Solutions Fund CB
Ordinary
100.0
LGIM Solutions Fund CC
Ordinary
100.0
Company name
Share class
% of equity
shares held
by the Group
LGIM Solutions Fund CG
Ordinary
100.0
LGIM Solutions Fund CH
Ordinary
100.0
LGIM Solutions Fund CP
Ordinary
100.0
LGIM Solutions Fund CQ
Ordinary
100.0
LGIM Solutions Fund CS
Ordinary
100.0
LGIM Solutions Fund CT
Ordinary
100.0
LGIM Solutions Fund DB
Ordinary
100.0
LGIM Solutions Fund DE
Ordinary
100.0
LGIM Solutions Fund DF
Ordinary
100.0
LGIM Solutions Fund DM
Ordinary
100.0
LGIM Solutions Fund DN
Ordinary
100.0
LGIM Solutions Fund DQ
Ordinary
100.0
LGIM Solutions Fund DR
Ordinary
100.0
LGIM Solutions Fund DU
Ordinary
100.0
LGIM Solutions Fund DV
Ordinary
100.0
LGIM Solutions Fund DX
Ordinary
100.0
LGIM Solutions Fund DY
Ordinary
100.0
LGIM Solutions Fund DZ
Ordinary
100.0
LGIM Solutions Fund EA
Ordinary
100.0
LGIM Solutions Fund EB
Ordinary
100.0
LGIM Solutions Fund EE
Ordinary
100.0
LGIM Solutions Fund EG
Ordinary
100.0
LGIM Solutions Fund EH
Ordinary
100.0
LGIM Solutions Fund EI
Ordinary
100.0
LGIM Solutions Fund EJ
Ordinary
100.0
LGIM Solutions Fund EK
Ordinary
100.0
LGIM Solutions Fund EL
Ordinary
100.0
LGIM Solutions Fund EM
Ordinary
100.0
LGIM Solutions Fund M
Ordinary
100.0
LGIM Synthetic Leveraged Credit Fund
Ordinary
100.0
LGIM Unleveraged Defensive Synthetic Equity
Fund
Ordinary
100.0
Sterling Liquidity Fund
Ordinary
46.6
Sterling Liquidity Plus Fund
Ordinary
36.7
US Dollar Liquidity Fund
Ordinary
50.2
70 Sir John Rogerson Quay, Dublin 2, D02 R296
Finovation Limited
Ordinary
and
convertible
100.0
L&G ESG Paris Aligned World Equity Index
Fund
Ordinary
100.0
L&G Private Markets LTAF
Ordinary
100.0
L&G RAFI Multi-Factor Climate Transition Index
Fund
Ordinary
100.0
Legal & General ICAV
Ordinary
100.0
Legal & General QIAIF ICAV
Ordinary
100.0
Legal & General UCITS ETF plc
Ordinary
100.0
LGIM Liquidity Funds plc
Ordinary
100.0
Company name
Share class
% of equity
shares held
by the Group
LGIM Managers (Europe) Limited
Ordinary
100.0
Japan
22F Toranomon Kotohira Tower, 1-2-8 Toranomon, Minato-ku, Tokyo,
105-0001
Legal & General Investment Management Japan
KK
Ordinary
100.0
Jersey
12 Castle Street St Helier, JE2 3RT
Borehamwood Property Unit Trust
Unit
100.0
22 Grenville Street, St. Helier, JE4 8PX
Clifford Limited
Ordinary
100.0
L&G Manchester Limited
Ordinary
100.0
Legal & General Student Living Limited
Ordinary
99.9
Scotway Limited
Ordinary
100.0
3rd Floor, 37 Esplanade, St. Helier, JE1 1AD
L&G Affordable Housing Holdco Limited
Ordinary
100.0
L&G Affordable Housing Northern Holdco
Limited
Ordinary
100.0
L&G Managed Fund Holdco Limited
Ordinary
100.0
47 Esplanade, St Helier, JE1 0BD
Performance Retail Unit Trust
Unit
100.0
Apex Group, IFC 5, St. Helier, JE1 1ST
Bishopsgate Long Term Property Fund General
Partner Limited
Ordinary
100.0
Aztec Group House, IFC6, The Esplanade, St. Helier, JE4 0QH
Access Development General Partner Limited
Ordinary
100.0
Access Development II General Partner Limited
Ordinary
100.0
Vantage General Partner Limited
Partnership
100.0
Lime Grove House, Green Street, St Helier, JE1 2ST
SCBD S6 Trust
Unit
100.0
Stratford City Offices Jersey Unit Trust (No.2)
Unit
99.8
Luxembourg
15 Boulevard F.W. Raiffeisen, L-2411
ESOF Casati Holdco S.\u00e0 r.l.
Ordinary
100.0
European Real Estate Special Opportunities
Fund GP S.\u00e0 r.l.
Ordinary
100.0
European Real Estate Special Opportunities
Fund I
Partnership
100.0
L&G Carried Interest Digital Infrastructure GP
S.\u00e0 r.l.
Ordinary
100.0
L&G Carried Interest Digital Infrastructure SCSp
Ordinary
100.0
L&G Digital Infrastructure Co-Invest 1 GP S.\u00e0
r.l.
Ordinary
100.0
L&G Digital Infrastructure Co-Invest 1 SCSp
Ordinary
100.0
L&G Digital Infrastructure Co-Invest 2 GP S.\u00e0
r.l.
Ordinary
100.0
L&G Digital Infrastructure Co-Invest 2 SCSp
Ordinary
100.0
L&G Digital Infrastructure Co-Invest 3 GP S.\u00e0
r.l.
Ordinary
100.0
L&G Digital Infrastructure Co-Invest 3 SCSp
Ordinary
100.0
Company name
Share class
% of equity
shares held
by the Group
L&G Digital Infrastructure GP S.\u00e0 r.l.
Ordinary
100.0
L&G Digital Infrastructure SCSp
Ordinary
100.0
L&G NTR Clean Power Transition General
Partner IV S.\u00e0 r.l.
Ordinary
100.0
L&G NTR Clean Power Transition Holding S.\u00e0
r.l.
Ordinary
100.0
L&G NTR Clean Power Transition IV SCSp
Ordinary
100.0
L&G Private Markets SV S.\u00e0 r.l.
Ordinary
100.0
L&G Team Digital Infrastructure SCSp
Ordinary
100.0
L&G Umbrella GP S.\u00e0 r.l.
Ordinary
100.0
Legal & General Private Markets SCA
Partnership
100.0
2-4, Rue Eugene Ruppert, L-2453
L&G Alternative Risk Premia Fund
Ordinary
83.2
L&G Buy & Maintain Credit Fund
Ordinary
96.2
L&G Climate Action Global Equity Fund
Ordinary
61.8
L&G Commodity Index Fund
Ordinary
60.1
L&G Defensive Synthetic Equity Index Fund
Ordinary
100.0
L&G Emerging Markets High Yield Bond Fund
Ordinary
96.0
L&G Emerging Markets Investment Grade Hard
Currency Corporate Bond Fund
Ordinary
74.6
L&G Emerging Markets Short Duration Bond
Fund
Ordinary
35.9
L&G Euro High Yield Bond Fund
Ordinary
100.0
L&G Global Aggregate Bond Fund
Ordinary
100.0
L&G Global Diversified Bond Fund
Ordinary
47.0
L&G Global Special Situations Credit Fund
Ordinary
98.4
L&G Global Unconstrained Bond Fund
Ordinary
86.7
L&G Net Zero Global Corporate Bond Fund
Ordinary
44.3
L&G Net Zero Short Dated Global Corporate
Bond Fund
Ordinary
100.0
L&G UK Core Plus Bond Fund
Ordinary
100.0
L&G US High Yield Bond Fund
Ordinary
99.9
L&G US Securitised Fund
Ordinary
100.0
L&G US Securitised Plus Fund
Ordinary
42.5
Legal & General SICAV
Ordinary
100.0
8 rue Lou Hemmer, Senningerberg, L-1748
L&G NTR Clean Power (Europe) III SCSp RAIF
Ordinary
49.7
L&G NTR Clean Power GP S.\u00e0 r.l.
Ordinary
100.0
L&G NTR Clean Power Master Holding S.\u00e0 r.l.
Ordinary
46.0
LGIM Clean Power General Partner S.\u00e0 r.l.
Ordinary
100.0
Scotland
50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ
L&G UK Universities Ventures (Carry) GP LLP
Partnership
100.0
L&G UK Universities Ventures (Carry) LP
Partnership
100.0
L&G UK Universities Ventures GP LLP
Partnership
100.0
L&G UK Universities Ventures LP
Partnership
100.0
UK PIF FGP LLP
Partnership
100.0
Company name
Share class
% of equity
shares held
by the Group
UKPIF Two Founder GP Limited
Partnership
100.0
Singapore
23 Church Street, Level 7, Units 718-19 and 785, Capital Square, 049481
LGIM Singapore Pte. Limited
Ordinary
100.0
The Netherlands
Strawinskylaan 1123, 1077 XX, Amsterdam
ESOF I Co\u00f6peratief U.A.
Ordinary
100.0
ESOF Willow Euro JV B.V.
Ordinary
100.0
ESOF Willow Euro Platform B.V.
Ordinary
100.0
United States
108 Lakeland Avenue, Dover, County of Kent, Delaware, DE 19901
L&G 265 S. Orange Holdings, LLC
Membership
interests
100.0
3275 Bennett Creek Avenue, Frederick, MD 21704
Banner Life Insurance Company
Ordinary
100.0
3500 South Dupont Highway, City of Dover, County of Kent, Delaware
19901
Potomac Ventures Number 1 Inc.
Ordinary
100.0
70 East Sunrise Highway, Suite 500, Valley Stream, New York 11581
William Penn Life Insurance Company of New
York Inc
Ordinary
100.0
71 South Wacker Drive, Suite 800, Chicago, IL
L&G 15091 Belford Holdings LLC
Membership
interests
100.0
L&G 15091 Belford LLC
Membership
interests
100.0
838 Walker Road, Suite 21-2, Dover, DE 19904
L&G 150 Richmond Holdings, LLC
Membership
interests
100.0
L&G 150 Richmond JV, LLC
Class A and
B
membership
interests
100.0
L&G 265 S. Orange JV, LLC
Class A and
B
membership
interests
100.0
L&G TEP Holdings, LLC
Ordinary
100.0
L&G TEP JV, LLC
Class A and
class B
shares
100.0
PVD Incubator, LLC
Ordinary
100.0
850 New Burton Road, Suite 201, Dover, Delaware 19904
Chesapeake Ventures, LLC
Ordinary
100.0
FBV Financing-1, LLC
Ordinary
100.0
FBV Financing-2, LLC
Ordinary
100.0
FBV Financing-3, LLC
Ordinary
100.0
FBV Financing-4, LLC
Membership
interests
100.0
FBV Financing-5, LLC
Membership
interests
100.0
Company name
Share class
% of equity
shares held
by the Group
L&G 375 Broadway Holdings 1, LLC
Membership
interests
100.0
L&G 375 Broadway Holdings 2, LLC
Membership
interests
100.0
L&G 375 Broadway, LLC
Membership
interests
100.0
L&G 544 Golden Ridge Holdings 1, LLC
Ordinary
100.0
L&G 544 Golden Ridge Holdings 2, LLC
Ordinary
100.0
L&G 544 Golden Ridge, LLC
Ordinary
100.0
L&G 765 Adams Holdings LLC
Membership
interests
100.0
L&G 765 Adams LLC
Membership
interests
100.0
Legal & General Everest US Bidco LLC
Membership
interests
100.0
Legal & General US Real Estate Equity Holding,
LLC
Membership
interests
100.0
C/O Corporation Service Company, 251 Little Falls Drive, Wilmington, Delaware
19808
L&G Reinsurance USA Holdings Limited
Common
stock
100.0
L&G USA OCIO Limited
Common
stock
100.0
L&G USA Resources Limited
Common
stock
100.0
Proprium Capital Real Estate Partners, LLC
Membership
interests
75.0
Corporation Service Company, 2711 Centerville Road, Suite 400,
Wilmington, Delaware 19808
Proprium Capital Partners GP, LLC
Membership
interests
100.0
Corporation Trust Center, 1209 Orange Street, Wilmington, County of
New Castle, Delaware 19801
Legal & General America Inc.
Ordinary
100.0
Legal & General Investment Management
America Inc.
Ordinary
100.0
Legal & General Investment Management
United States (Holdings), Inc.
Ordinary
100.0
LGC 150 Richmond US Holdco, LLC
Membership
interests
100.0
LGC 265 S. Orange US Holdco, LLC
Membership
interests
100.0
LGC US Holdco 1 Inc.
Ordinary
100.0
LGC US Holdco 2, LLC
Ordinary
100.0
Marsh Management Services Inc, 463 Mountain View Drive, Suite 301, 3rd
Floor, Colchester, Vermont 05446
First British Vermont Reinsurance Company II,
Limited
Ordinary
100.0
First British Vermont Reinsurance Company III,
Limited
Ordinary
100.0
First British Vermont Reinsurance Company IV
Limited
Ordinary
100.0
(ii) Associates and joint ventures
The Group has the following significant holdings classified as associates and joint ventures which have been included as financial
investments and investments in associates and joint ventures accounted for using the equity method. The gross assets of these
companies are in part funded by borrowings which are non-recourse to the Group.
Company name
Country of incorporation
Accounting treatment
Investment type
Share class
% of equity
shares held by
Group
245 Hammersmith Road (General Partner) Limited
England and Wales
FVTPL
Joint Venture
Partnership
50.0
245 Hammersmith Road Limited Partnership
England and Wales
FVTPL
Joint Venture
Partnership
50.0
245 HR GP LLP
England and Wales
FVTPL
Joint Venture
Partnership
50.0
Access Development II Limited Partnership
Jersey
Equity Method
Joint Venture
Ordinary
50.0
Access Development Limited Partnership
Jersey
Equity Method
Joint Venture
Ordinary
50.0
Bruntwood Science Management Services Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Bruntwood SciTech Limited
England and Wales
Equity Method
Associate
Ordinary
43.9
ECF (General Partner) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
33.3
English Cities Fund
England and Wales
FVTPL
Associate
Partnership
35.4
Gravesend Coldharbour Road Management Company Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Household Capital Pty Limited
Australia
Equity Method
Associate
Ordinary
38.1
Imagine Mortgages Limited (Generation Home)
England and Wales
FVTPL
Associate
Ordinary
39.5
ImpactA Global Holding Limited
England and Wales
Equity Method
Associate
Ordinary
40.0
Kensa Group Limited
England and Wales
FVTPL
Associate
Ordinary
37.0
MoneyHub Financial Technology Limited
England and Wales
FVTPL
Associate
Ordinary
12.6
Newcastle Helix Developments LLP
England and Wales
FVTPL
Associate
Ordinary
33.0
Nomura Herne Hill
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
NTR Asset Management Europe DAC
Ireland
Equity Method
Associate
Ordinary
25.0
Oxford University Property Development Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Pemberton Asset Management Holdings Limited
Jersey
FVTPL
Associate
Ordinary
40.0
Proprium Capital Partners (Australia) Pty Ltd
Australia
Equity Method
Joint Venture
Ordinary
37.5
Salary Direct Holdings Limited
Jersey
FVTPL
Associate
Ordinary
53.5
Senior Living (Comberton) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Senior Living (Farnhams) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Senior Living (Freelands) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Senior Living (Hemel Hempstead) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Senior Living (Matchams) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Senior Living (Sunbury-on-Thames) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Senior Living (Walkern) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Sennen Finance Designated Activity Company
Ireland
Equity Method
Joint Venture
N/A
0.0
Sero Technologies Limited
England and Wales
FVTPL
Associate
Ordinary
21.5
Smartr365 Finance Limited
England and Wales
FVTPL
Associate
Ordinary
40.4
SOJV LLP
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Techficient Holdings LLC
USA
Equity Method
Associate
N/A
45.0
", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsOtherThanInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-670": { "value": "
(ii) Fair value hierarchy
The table below breaks down the fair value of financial investments and investment property by fair value hierarchy level.
Total
Level 1
Level 2
Level 3
As at 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Shareholder
Equity securities
2,072
538
\u2013
1,534
Debt securities
79,772
43,247
16,425
20,100
Derivative assets
41,625
1
41,624
\u2013
Loans at fair value
1,070
\u2013
1,070
\u2013
Investment property
6,839
\u2013
\u2013
6,839
Total Shareholder
131,378
43,786
59,119
28,473
Unit linked
Equity securities
232,472
229,627
3
2,842
Debt securities
147,998
102,976
42,920
2,102
Derivative assets
2,704
43
2,661
\u2013
Loans at fair value
5,897
\u2013
5,897
\u2013
Investment property
4,797
\u2013
\u2013
4,797
Total Unit linked
393,868
332,646
51,481
9,741
Total financial investments and investment property at fair value
525,246
376,432
110,600
38,214
Debt securities at amortised cost1
6,930
\u2013
43
6,887
Loans at amortised cost 1
194
1
\u2013
193
1. This table includes debt securities and loans which are held at amortised cost on the Consolidated Balance Sheet at a total value of \u00a38,167m.
Total
Level 1
Level 2
Level 3
As at 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Shareholder
Equity securities
2,948
960
170
1,818
Debt securities
78,207
31,714
25,424
21,069
Derivative assets
49,195
7
49,188
\u2013
Loans at fair value
2,630
\u2013
2,630
\u2013
Investment property
5,955
\u2013
\u2013
5,955
Total Shareholder
138,935
32,681
77,412
28,842
Unit linked
Equity securities
198,342
197,532
1
809
Debt securities
148,411
97,799
49,269
1,343
Derivative assets
1,997
84
1,913
\u2013
Loans at fair value
4,772
\u2013
4,772
\u2013
Investment property
3,867
\u2013
\u2013
3,867
Total Unit Linked
357,389
295,415
55,955
6,019
Total financial investments and investment property at fair value
496,324
328,096
133,367
34,861
Debt securities at amortised cost1
7,847
\u2013
43
7,804
Loans at amortised cost 1
84
1
\u2013
83
1. This table includes debt securities and loans which are held at amortised cost on the Consolidated Balance Sheet at a total value of \u00a3 9,049m.
The levels of fair value measurement bases are defined as follows:
\u2022 Level 1: fair values measured using quoted prices (unadjusted) in active markets for identical assets or liabilities.
\u2022 Level 2: fair values measured using valuation techniques for all inputs significant to the measurement other than quoted prices included
within\u00a0Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
\u2022 Level 3: fair values measured using valuation techniques for any input for the asset or liability significant to the measurement that is not
based on\u00a0observable market data (unobservable inputs).
(a) Level 2 assets measured at fair value
All of the Group\u2019s Level 2 assets have been valued using standard market pricing sources, such as IHS Markit, ICE and Bloomberg, or Index
Providers such as Barclays, Merrill Lynch or JPMorgan. Each uses mathematical modelling and multiple source validation in order to
determine consensus prices, with the exception of OTC Derivative holdings; OTCs are marked to market using an in-house system (Lombard
Oberon), external vendor (IHS Markit), internal model or Counterparty Broker marks. In normal market conditions, we would consider these
market prices\u00a0to\u00a0be observable market prices. Following consultation with our pricing providers and a number of their contributing brokers,
we have considered that these prices are not from a suitably active market and have therefore classified them as Level 2.
The Group\u2019s policy is to re-assess categorisation of financial assets at the end of each reporting period and to recognise transfers between
levels\u00a0at that point in time. At 31 December 2025 debt securities totalling net \u00a310bn (2024: \u00a314bn) transferred from Level 2 to Level 1 in
the fair\u00a0value hierarchy.
(b) Level 3 assets measured at fair value
Level 3 assets, where modelling techniques are used, comprise property, unquoted securities, untraded debt securities and securities
where unquoted prices are provided by a single broker. Unquoted securities include suspended securities, investments in private equity
and property vehicles. Untraded debt securities include private placements, commercial real estate loans, income strips, retirement interest
only and other lifetime mortgages.
In many situations, inputs used to measure the fair value of an asset or liability may fall into different levels of the fair value hierarchy.
In\u00a0these situations, the Group determines the level in which the fair value falls based upon the lowest level input that is significant to
the\u00a0determination of\u00a0the fair value. As a result, both observable and unobservable inputs may be used in the determination of fair values
that\u00a0the Group has classified\u00a0within Level 3.
The Group determines the fair values of certain financial assets and liabilities based on quoted market prices, where available. The Group
also determines fair value based on estimated future cash flows discounted at the appropriate current market rate. As appropriate, fair
values reflect adjustments for counterparty credit quality, the Group\u2019s credit standing, liquidity and risk margins on unobservable inputs.
Fair values are subject to a control framework designed to ensure that input variables and outputs are assessed independent of the risk
taker. These inputs and outputs are reviewed and approved by a valuation committee and validated independently as appropriate.
Equity
securities
Other
financial
investments
Investment
property
Total
Equity
securities
Other
financial
investments
Investment
property
Total
2025
2025
2025
2025
2024
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
As at 1 January
2,627
22,412
9,822
34,861
2,392
20,463
8,893
31,748
Transfer to held for sale
(89)
(3,024)
\u2013
(3,113)
\u2013
\u2013
\u2013
\u2013
Total gains/(losses) for the year:
Realised gains or (losses) 1
4
(11)
(64)
(71)
4
(17)
(2)
(15)
Unrealised gains or (losses) 1
(109)
66
156
113
(208)
(278)
(20)
(506)
Purchases/Additions
2,295
5,581
2,007
9,883
789
5,649
1,502
7,940
Sales/Disposals
(301)
(3,098)
(264)
(3,663)
(364)
(3,369)
(552)
(4,285)
Transfers into Level 3
48
320
\u2013
368
\u2013
70
\u2013
70
Transfers out of Level 3
(92)
(36)
\u2013
(128)
\u2013
(144)
\u2013
(144)
Foreign exchange rate movements
(7)
(8)
(21)
(36)
14
38
1
53
As at 31 December
4,376
22,202
11,636
38,214
2,627
22,412
9,822
34,861
1. Realised and unrealised gains/(losses) are recognised in Investment return in the Consolidated Income Statement.
The breakdown below includes assets which are disclosed in Assets of operations classified as held for sale in the Consolidated Balance
Sheet where applicable.
Equity securities
Level 3 equity securities amount to \u00a34,487m (2024: \u00a32,627m), of which the majority is made up of holdings in investment property vehicles
and\u00a0private investment funds. They are valued at the proportion of the Group\u2019s holding of the Net Asset Value reported by the investment
vehicles.\u00a0Other equity securities are valued by a number of third-party specialists using a range of techniques which are often dependent on
the\u00a0maturity of\u00a0the underlying investment but can also depend on the characteristics of individual assets. Such techniques include transaction
values underpinned by analysis of milestone achievement and cash runway for early/start-up stage investments, discounted cash flow
models for\u00a0investments at the next stage of development and earnings multiples for more mature investments.
Other financial investments
Lifetime mortgage (LTM) loans and retirement interest only mortgages amount to \u00a35,756m (2024: \u00a35,861m). Lifetime mortgages are valued
using a discounted cash flow model by projecting best estimate net asset proceeds and discounted using rates inferred from current LTM
loan pricing. The inferred illiquidity premiums for the majority of the portfolio range between 150 and 250bps. (2024: between 150 and
250bps). This\u00a0ensures the value of loans at outset is consistent with the purchase price of the loan and achieves consistency between new
and in-force loans. Lifetime mortgages include a no negative equity guarantee (NNEG) to borrowers. This ensures that if there is a shortfall
between the\u00a0sale proceeds of the property and the outstanding loan balance on redemption of the loan, the value of the loan will be reduced
by this amount. The NNEG on loan redemption is valued as a series of put\u00a0options, which we calculate using a variant of the Black-Scholes
formula. Key assumptions in the valuation of lifetime mortgages include short-term and long-term property growth rates, property index
volatility, voluntary early repayments and longevity assumptions. The valuation as\u00a0at 31 December 2025 reflects a combination of short-
term and long-term property growth rate assumptions equivalent to a flat rate of 3.5% annually (2024: 3.4% annually), after allowing for
the effects of dilapidation. The values of the properties collateralising the LTM loans are updated from the date of the last property valuation
to the valuation date by indexing using UK regional house price indices.
Private credit loans (including commercial real estate loans) amount to \u00a314,511m (2024: \u00a311,779m). Their valuation is determined by
discounted future cash flows which are based on the market yield and spread of the Asset Management approved comparable bonds
and the initial transaction spread, both of which are agreed by S&P Global who also provide an independent verification of the selection of
the comparable bonds. Unobservable inputs that go into the determination of\u00a0comparators include rating, sector, sub-sector, performance
dynamics, financing structure and duration of investment. Existing private credit investments, which were executed as far back as 2011, are
subject to a range of interest rate formats, although the majority are fixed rate. The weighted average duration of the portfolio is 7.0 years
(2024: 7.6 years), with a weighted average life of 10.0 years (2024: 11.0 years). Maturities in the portfolio currently extend out\u00a0to\u00a02074
(2024: to 2074). The private credit portfolio of assets has internal ratings assigned by an independent credit team in line with internally
developed methodologies. These credit ratings range from AAA to BB- (2024: AAA to BB-).
Private placements, all of which relate to held for sale assets, amount to \u00a32,579m (2024: \u00a32,181m). They are valued using a pricing matrix
comprised of a public spread matrix, internal ratings assigned to each holding, average life of each holding and a premium spread matrix. These
are added to the risk-free rate to calculate the discounted cash flows and establish a market value for each investment grade private placement.
Income strip assets amount to \u00a31,272m (2024: \u00a31,280m). Their valuation is outsourced to CBRE who apply a yield to maturity to\u00a0discounted
future cash flows to derive valuations. The overall valuation takes into account the property location, tenant details, tenure, rent, rental break
terms, lease expiries and underlying residual value of the property. The valuation as at 31 December 2025 reflects equivalent yield ranges
between 3% and 18% (2024: between 2% to 17%) and estimated rental values (ERV) between \u00a31 and \u00a326 per sq.ft
(2024: between \u00a37 and \u00a3367 per sq.ft).
Commercial mortgage loans, all of which relate to held for sale assets, amount to \u00a3795m (2024: \u00a3843m) and are determined by incorporating
credit risk for performing loans at the portfolio level and adjusted for loans identified to be distressed at the loan level. The projected cash flows
of each loan are discounted along stochastic risk-free rate paths and are inclusive of an Option Adjusted Spread (OAS), derived from current
internal pricing on new loans, along with\u00a0the best observable inputs.
Other debt securities which are not traded in an active market amount to \u00a3663m (2024: \u00a3468m). They have been valued using third-party
or\u00a0counterparty valuations and these prices are considered to be unobservable due to infrequent market transactions.
Investment property
Level 3 investment property amounting to \u00a311,636m (2024: \u00a39,822m) is valued with the involvement of external valuers. All property
valuations in\u00a0the UK are carried out in accordance with the latest edition of the Valuation Standards published by the Royal Institute of
Chartered Surveyors and are undertaken by appropriately qualified valuers as defined therein. Outside the UK, valuations are produced in
conjunction with external qualified professional values in the countries concerned. Whilst transaction evidence underpins the valuation
process, the definition of market value, including the commentary, in practice requires the valuer to reflect the realities of the current market.
In this context, valuers must use their market\u00a0knowledge and professional judgement and not rely only upon market sentiment based on
historic transactional comparables.
The valuation of investment properties also includes an income approach that is based on current rental income plus anticipated uplifts,
where\u00a0the uplift and discount rates are derived from rates implied by recent market transactions. These inputs are deemed unobservable.
The\u00a0valuation as at 31 December 2025 reflects equivalent yield ranges between 1% and 53% (2024: between 1% and 53%) and Estimated
Rental Value (ERV) between \u00a31 and \u00a3219 per sq.ft (2024: between \u00a32 and \u00a3369 per sq.ft).
The table below shows the valuation of investment property by sector:
2025
2024
\u00a3m
\u00a3m
Retail
1,351
1,242
Leisure
580
493
Distribution
1,279
1,058
Office Space
3,267
2,876
Industrial and other commercial
2,306
1,805
Accommodation
2,853
2,348
Total investment property
11,636
9,822
c) Effect of changes in assumptions on Level 3 assets
Fair values of financial instruments are, in certain circumstances, measured using valuation techniques that incorporate assumptions that are
not\u00a0evidenced by prices from observable current market transactions in the same instrument and are not based on observable market data.
Where material, the Group assesses the sensitivity of fair values of Level 3 investments to changes in unobservable inputs to reasonable
alternative assumptions. The table below shows the impact of applying these sensitivities to the fair value of Level 3 assets as at
31 December 2025, including assets which are part of operations classified as held for sale. Further disclosure on how these sensitivities
have been applied can be found in the descriptions following the table.
Sensitivities
Fair value 2025
Positive impact
Negative impact
\u00a3m
\u00a3m
\u00a3m
Lifetime mortgages
5,756
204
(246)
Private credit portfolios
17,885
756
(756)
Investment property
11,636
943
(926)
Other investments1
6,422
396
(479)
Total Level 3 assets
41,699
2,299
(2,407)
1. Other investments include Level 3 equity securities, income strip assets and other traded debt securities which are Level 3.
The sensitivities are not a function of sensitising a single variable relating to the valuation of the asset, but rather a function of flexing
multiple factors often at individual asset level. The following sets out a number of key factors by asset type and how they have been
flexed to derive reasonable alternative valuations.
Lifetime mortgages
Key assumptions used in the valuation of lifetime mortgage assets are listed in Note 13(ii)(b) and sensitivities are applied to each assumption
which are used to derive the values in the above table. The most significant increase in value is a 20bps reduction in the discount rate which,
applied in isolation produces a sensitised value of \u00a3134m. The most significant decrease in value is a 20bps increase in the discount rate
which, applied in isolation produces a sensitised value of \u00a3(130)m.
Private credit portfolios
The sensitivity in the private credit portfolio has been determined through a method which estimates investment spread value premium
differences as compared to the institutional investment market. Individual investment characteristics of each holding, such as credit rating
and duration are used to determine spread differentials for the purposes of determining alternate values. Spread differentials are determined
to be lower for highly rated and/or shorter duration assets as compared to lower rated and/or longer duration assets. A significant component of
the spread differential is in relation to the selection of comparator bonds, which is the potential difference in spread of the basket of relevant
comparators determined by respective investors. If we were to take an AA rated asset it may attract a spread differential of 30bps on the
selection of comparator bonds as opposed to 45bps for a similar duration BBB rated asset. Applied in isolation the sensitivity used to reflect
the spread in comparator bond selection results in sensitised values of \u00a3260m and \u00a3(260)m.
Investment property
Investment property holdings are valued by independent valuers on the basis of open market value as defined in the appraisal and valuation
manual of the Royal Institute of Chartered Surveyors (RICS). As such, sensitivities are calculated through a mixture of asset level and portfolio
level methodologies which make reference to individual investment characteristics of the holding but do not flex individual assumptions
used by the independent expert in valuing the holdings. Valuation uncertainty is assessed using three methodologies that are each applied
independently and then weighted equally to determine the overall portfolio sensitivity: (i) acceptable margin of error approach reflecting
real asset valuation specialists view on uncertainty, (ii) an fixed income approach that derives sensitivities for each asset using duration,
credit rating and inflation linkage to determine asset\u2011specific stress factors and (iii) a property yield approach that flexes valuation yields by
reference to remaining term and credit rating (for example, AA rated asset with remaining term of 25 years in normal market conditions this
would lead to a 15bps yield flex as opposed to a 35bps yield flex for a BBB rated asset with a 30 year remaining term). While these three
methodologies are combined to produce a weighted average sensitivity on Sales and Leaseback and Build to Rent portfolio. Other portfolios
apply margin of error sensitivity.
The methodology which leads to the most significant sensitivity at the balance sheet date is an acceptable margin of error reflecting real
asset valuation specialists view on uncertainty of 10% either way, subject to the valuation being undertaken with due care. If this sensitivity
were to be taken without a weighting it would produce sensitised values of \u00a3587m and \u00a3(587)m.
It should be noted that some sensitivities described above are non-linear and larger or smaller impacts should not be interpolated or
extrapolated from these results.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-669": { "value": "
(ii) Fair value hierarchy
The table below breaks down the fair value of financial investments and investment property by fair value hierarchy level.
Total
Level 1
Level 2
Level 3
As at 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Shareholder
Equity securities
2,072
538
\u2013
1,534
Debt securities
79,772
43,247
16,425
20,100
Derivative assets
41,625
1
41,624
\u2013
Loans at fair value
1,070
\u2013
1,070
\u2013
Investment property
6,839
\u2013
\u2013
6,839
Total Shareholder
131,378
43,786
59,119
28,473
Unit linked
Equity securities
232,472
229,627
3
2,842
Debt securities
147,998
102,976
42,920
2,102
Derivative assets
2,704
43
2,661
\u2013
Loans at fair value
5,897
\u2013
5,897
\u2013
Investment property
4,797
\u2013
\u2013
4,797
Total Unit linked
393,868
332,646
51,481
9,741
Total financial investments and investment property at fair value
525,246
376,432
110,600
38,214
Debt securities at amortised cost1
6,930
\u2013
43
6,887
Loans at amortised cost 1
194
1
\u2013
193
1. This table includes debt securities and loans which are held at amortised cost on the Consolidated Balance Sheet at a total value of \u00a38,167m.
Total
Level 1
Level 2
Level 3
As at 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Shareholder
Equity securities
2,948
960
170
1,818
Debt securities
78,207
31,714
25,424
21,069
Derivative assets
49,195
7
49,188
\u2013
Loans at fair value
2,630
\u2013
2,630
\u2013
Investment property
5,955
\u2013
\u2013
5,955
Total Shareholder
138,935
32,681
77,412
28,842
Unit linked
Equity securities
198,342
197,532
1
809
Debt securities
148,411
97,799
49,269
1,343
Derivative assets
1,997
84
1,913
\u2013
Loans at fair value
4,772
\u2013
4,772
\u2013
Investment property
3,867
\u2013
\u2013
3,867
Total Unit Linked
357,389
295,415
55,955
6,019
Total financial investments and investment property at fair value
496,324
328,096
133,367
34,861
Debt securities at amortised cost1
7,847
\u2013
43
7,804
Loans at amortised cost 1
84
1
\u2013
83
1. This table includes debt securities and loans which are held at amortised cost on the Consolidated Balance Sheet at a total value of \u00a3 9,049m.
The levels of fair value measurement bases are defined as follows:
\u2022 Level 1: fair values measured using quoted prices (unadjusted) in active markets for identical assets or liabilities.
\u2022 Level 2: fair values measured using valuation techniques for all inputs significant to the measurement other than quoted prices included
within\u00a0Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
\u2022 Level 3: fair values measured using valuation techniques for any input for the asset or liability significant to the measurement that is not
based on\u00a0observable market data (unobservable inputs).
(a) Level 2 assets measured at fair value
All of the Group\u2019s Level 2 assets have been valued using standard market pricing sources, such as IHS Markit, ICE and Bloomberg, or Index
Providers such as Barclays, Merrill Lynch or JPMorgan. Each uses mathematical modelling and multiple source validation in order to
determine consensus prices, with the exception of OTC Derivative holdings; OTCs are marked to market using an in-house system (Lombard
Oberon), external vendor (IHS Markit), internal model or Counterparty Broker marks. In normal market conditions, we would consider these
market prices\u00a0to\u00a0be observable market prices. Following consultation with our pricing providers and a number of their contributing brokers,
we have considered that these prices are not from a suitably active market and have therefore classified them as Level 2.
The Group\u2019s policy is to re-assess categorisation of financial assets at the end of each reporting period and to recognise transfers between
levels\u00a0at that point in time. At 31 December 2025 debt securities totalling net \u00a310bn (2024: \u00a314bn) transferred from Level 2 to Level 1 in
the fair\u00a0value hierarchy.
(b) Level 3 assets measured at fair value
Level 3 assets, where modelling techniques are used, comprise property, unquoted securities, untraded debt securities and securities
where unquoted prices are provided by a single broker. Unquoted securities include suspended securities, investments in private equity
and property vehicles. Untraded debt securities include private placements, commercial real estate loans, income strips, retirement interest
only and other lifetime mortgages.
In many situations, inputs used to measure the fair value of an asset or liability may fall into different levels of the fair value hierarchy.
In\u00a0these situations, the Group determines the level in which the fair value falls based upon the lowest level input that is significant to
the\u00a0determination of\u00a0the fair value. As a result, both observable and unobservable inputs may be used in the determination of fair values
that\u00a0the Group has classified\u00a0within Level 3.
The Group determines the fair values of certain financial assets and liabilities based on quoted market prices, where available. The Group
also determines fair value based on estimated future cash flows discounted at the appropriate current market rate. As appropriate, fair
values reflect adjustments for counterparty credit quality, the Group\u2019s credit standing, liquidity and risk margins on unobservable inputs.
Fair values are subject to a control framework designed to ensure that input variables and outputs are assessed independent of the risk
taker. These inputs and outputs are reviewed and approved by a valuation committee and validated independently as appropriate.
Equity
securities
Other
financial
investments
Investment
property
Total
Equity
securities
Other
financial
investments
Investment
property
Total
2025
2025
2025
2025
2024
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
As at 1 January
2,627
22,412
9,822
34,861
2,392
20,463
8,893
31,748
Transfer to held for sale
(89)
(3,024)
\u2013
(3,113)
\u2013
\u2013
\u2013
\u2013
Total gains/(losses) for the year:
Realised gains or (losses) 1
4
(11)
(64)
(71)
4
(17)
(2)
(15)
Unrealised gains or (losses) 1
(109)
66
156
113
(208)
(278)
(20)
(506)
Purchases/Additions
2,295
5,581
2,007
9,883
789
5,649
1,502
7,940
Sales/Disposals
(301)
(3,098)
(264)
(3,663)
(364)
(3,369)
(552)
(4,285)
Transfers into Level 3
48
320
\u2013
368
\u2013
70
\u2013
70
Transfers out of Level 3
(92)
(36)
\u2013
(128)
\u2013
(144)
\u2013
(144)
Foreign exchange rate movements
(7)
(8)
(21)
(36)
14
38
1
53
As at 31 December
4,376
22,202
11,636
38,214
2,627
22,412
9,822
34,861
1. Realised and unrealised gains/(losses) are recognised in Investment return in the Consolidated Income Statement.
The breakdown below includes assets which are disclosed in Assets of operations classified as held for sale in the Consolidated Balance
Sheet where applicable.
Equity securities
Level 3 equity securities amount to \u00a34,487m (2024: \u00a32,627m), of which the majority is made up of holdings in investment property vehicles
and\u00a0private investment funds. They are valued at the proportion of the Group\u2019s holding of the Net Asset Value reported by the investment
vehicles.\u00a0Other equity securities are valued by a number of third-party specialists using a range of techniques which are often dependent on
the\u00a0maturity of\u00a0the underlying investment but can also depend on the characteristics of individual assets. Such techniques include transaction
values underpinned by analysis of milestone achievement and cash runway for early/start-up stage investments, discounted cash flow
models for\u00a0investments at the next stage of development and earnings multiples for more mature investments.
Other financial investments
Lifetime mortgage (LTM) loans and retirement interest only mortgages amount to \u00a35,756m (2024: \u00a35,861m). Lifetime mortgages are valued
using a discounted cash flow model by projecting best estimate net asset proceeds and discounted using rates inferred from current LTM
loan pricing. The inferred illiquidity premiums for the majority of the portfolio range between 150 and 250bps. (2024: between 150 and
250bps). This\u00a0ensures the value of loans at outset is consistent with the purchase price of the loan and achieves consistency between new
and in-force loans. Lifetime mortgages include a no negative equity guarantee (NNEG) to borrowers. This ensures that if there is a shortfall
between the\u00a0sale proceeds of the property and the outstanding loan balance on redemption of the loan, the value of the loan will be reduced
by this amount. The NNEG on loan redemption is valued as a series of put\u00a0options, which we calculate using a variant of the Black-Scholes
formula. Key assumptions in the valuation of lifetime mortgages include short-term and long-term property growth rates, property index
volatility, voluntary early repayments and longevity assumptions. The valuation as\u00a0at 31 December 2025 reflects a combination of short-
term and long-term property growth rate assumptions equivalent to a flat rate of 3.5% annually (2024: 3.4% annually), after allowing for
the effects of dilapidation. The values of the properties collateralising the LTM loans are updated from the date of the last property valuation
to the valuation date by indexing using UK regional house price indices.
Private credit loans (including commercial real estate loans) amount to \u00a314,511m (2024: \u00a311,779m). Their valuation is determined by
discounted future cash flows which are based on the market yield and spread of the Asset Management approved comparable bonds
and the initial transaction spread, both of which are agreed by S&P Global who also provide an independent verification of the selection of
the comparable bonds. Unobservable inputs that go into the determination of\u00a0comparators include rating, sector, sub-sector, performance
dynamics, financing structure and duration of investment. Existing private credit investments, which were executed as far back as 2011, are
subject to a range of interest rate formats, although the majority are fixed rate. The weighted average duration of the portfolio is 7.0 years
(2024: 7.6 years), with a weighted average life of 10.0 years (2024: 11.0 years). Maturities in the portfolio currently extend out\u00a0to\u00a02074
(2024: to 2074). The private credit portfolio of assets has internal ratings assigned by an independent credit team in line with internally
developed methodologies. These credit ratings range from AAA to BB- (2024: AAA to BB-).
Private placements, all of which relate to held for sale assets, amount to \u00a32,579m (2024: \u00a32,181m). They are valued using a pricing matrix
comprised of a public spread matrix, internal ratings assigned to each holding, average life of each holding and a premium spread matrix. These
are added to the risk-free rate to calculate the discounted cash flows and establish a market value for each investment grade private placement.
Income strip assets amount to \u00a31,272m (2024: \u00a31,280m). Their valuation is outsourced to CBRE who apply a yield to maturity to\u00a0discounted
future cash flows to derive valuations. The overall valuation takes into account the property location, tenant details, tenure, rent, rental break
terms, lease expiries and underlying residual value of the property. The valuation as at 31 December 2025 reflects equivalent yield ranges
between 3% and 18% (2024: between 2% to 17%) and estimated rental values (ERV) between \u00a31 and \u00a326 per sq.ft
(2024: between \u00a37 and \u00a3367 per sq.ft).
Commercial mortgage loans, all of which relate to held for sale assets, amount to \u00a3795m (2024: \u00a3843m) and are determined by incorporating
credit risk for performing loans at the portfolio level and adjusted for loans identified to be distressed at the loan level. The projected cash flows
of each loan are discounted along stochastic risk-free rate paths and are inclusive of an Option Adjusted Spread (OAS), derived from current
internal pricing on new loans, along with\u00a0the best observable inputs.
Other debt securities which are not traded in an active market amount to \u00a3663m (2024: \u00a3468m). They have been valued using third-party
or\u00a0counterparty valuations and these prices are considered to be unobservable due to infrequent market transactions.
Investment property
Level 3 investment property amounting to \u00a311,636m (2024: \u00a39,822m) is valued with the involvement of external valuers. All property
valuations in\u00a0the UK are carried out in accordance with the latest edition of the Valuation Standards published by the Royal Institute of
Chartered Surveyors and are undertaken by appropriately qualified valuers as defined therein. Outside the UK, valuations are produced in
conjunction with external qualified professional values in the countries concerned. Whilst transaction evidence underpins the valuation
process, the definition of market value, including the commentary, in practice requires the valuer to reflect the realities of the current market.
In this context, valuers must use their market\u00a0knowledge and professional judgement and not rely only upon market sentiment based on
historic transactional comparables.
The valuation of investment properties also includes an income approach that is based on current rental income plus anticipated uplifts,
where\u00a0the uplift and discount rates are derived from rates implied by recent market transactions. These inputs are deemed unobservable.
The\u00a0valuation as at 31 December 2025 reflects equivalent yield ranges between 1% and 53% (2024: between 1% and 53%) and Estimated
Rental Value (ERV) between \u00a31 and \u00a3219 per sq.ft (2024: between \u00a32 and \u00a3369 per sq.ft).
The table below shows the valuation of investment property by sector:
2025
2024
\u00a3m
\u00a3m
Retail
1,351
1,242
Leisure
580
493
Distribution
1,279
1,058
Office Space
3,267
2,876
Industrial and other commercial
2,306
1,805
Accommodation
2,853
2,348
Total investment property
11,636
9,822
c) Effect of changes in assumptions on Level 3 assets
Fair values of financial instruments are, in certain circumstances, measured using valuation techniques that incorporate assumptions that are
not\u00a0evidenced by prices from observable current market transactions in the same instrument and are not based on observable market data.
Where material, the Group assesses the sensitivity of fair values of Level 3 investments to changes in unobservable inputs to reasonable
alternative assumptions. The table below shows the impact of applying these sensitivities to the fair value of Level 3 assets as at
31 December 2025, including assets which are part of operations classified as held for sale. Further disclosure on how these sensitivities
have been applied can be found in the descriptions following the table.
Sensitivities
Fair value 2025
Positive impact
Negative impact
\u00a3m
\u00a3m
\u00a3m
Lifetime mortgages
5,756
204
(246)
Private credit portfolios
17,885
756
(756)
Investment property
11,636
943
(926)
Other investments1
6,422
396
(479)
Total Level 3 assets
41,699
2,299
(2,407)
1. Other investments include Level 3 equity securities, income strip assets and other traded debt securities which are Level 3.
The sensitivities are not a function of sensitising a single variable relating to the valuation of the asset, but rather a function of flexing
multiple factors often at individual asset level. The following sets out a number of key factors by asset type and how they have been
flexed to derive reasonable alternative valuations.
Lifetime mortgages
Key assumptions used in the valuation of lifetime mortgage assets are listed in Note 13(ii)(b) and sensitivities are applied to each assumption
which are used to derive the values in the above table. The most significant increase in value is a 20bps reduction in the discount rate which,
applied in isolation produces a sensitised value of \u00a3134m. The most significant decrease in value is a 20bps increase in the discount rate
which, applied in isolation produces a sensitised value of \u00a3(130)m.
Private credit portfolios
The sensitivity in the private credit portfolio has been determined through a method which estimates investment spread value premium
differences as compared to the institutional investment market. Individual investment characteristics of each holding, such as credit rating
and duration are used to determine spread differentials for the purposes of determining alternate values. Spread differentials are determined
to be lower for highly rated and/or shorter duration assets as compared to lower rated and/or longer duration assets. A significant component of
the spread differential is in relation to the selection of comparator bonds, which is the potential difference in spread of the basket of relevant
comparators determined by respective investors. If we were to take an AA rated asset it may attract a spread differential of 30bps on the
selection of comparator bonds as opposed to 45bps for a similar duration BBB rated asset. Applied in isolation the sensitivity used to reflect
the spread in comparator bond selection results in sensitised values of \u00a3260m and \u00a3(260)m.
Investment property
Investment property holdings are valued by independent valuers on the basis of open market value as defined in the appraisal and valuation
manual of the Royal Institute of Chartered Surveyors (RICS). As such, sensitivities are calculated through a mixture of asset level and portfolio
level methodologies which make reference to individual investment characteristics of the holding but do not flex individual assumptions
used by the independent expert in valuing the holdings. Valuation uncertainty is assessed using three methodologies that are each applied
independently and then weighted equally to determine the overall portfolio sensitivity: (i) acceptable margin of error approach reflecting
real asset valuation specialists view on uncertainty, (ii) an fixed income approach that derives sensitivities for each asset using duration,
credit rating and inflation linkage to determine asset\u2011specific stress factors and (iii) a property yield approach that flexes valuation yields by
reference to remaining term and credit rating (for example, AA rated asset with remaining term of 25 years in normal market conditions this
would lead to a 15bps yield flex as opposed to a 35bps yield flex for a BBB rated asset with a 30 year remaining term). While these three
methodologies are combined to produce a weighted average sensitivity on Sales and Leaseback and Build to Rent portfolio. Other portfolios
apply margin of error sensitivity.
The methodology which leads to the most significant sensitivity at the balance sheet date is an acceptable margin of error reflecting real
asset valuation specialists view on uncertainty of 10% either way, subject to the valuation being undertaken with due care. If this sensitivity
were to be taken without a weighting it would produce sensitised values of \u00a3587m and \u00a3(587)m.
It should be noted that some sensitivities described above are non-linear and larger or smaller impacts should not be interpolated or
extrapolated from these results.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-668": { "value": "
(ii) Fair value hierarchy
The table below breaks down the fair value of financial investments and investment property by fair value hierarchy level.
Total
Level 1
Level 2
Level 3
As at 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Shareholder
Equity securities
2,072
538
\u2013
1,534
Debt securities
79,772
43,247
16,425
20,100
Derivative assets
41,625
1
41,624
\u2013
Loans at fair value
1,070
\u2013
1,070
\u2013
Investment property
6,839
\u2013
\u2013
6,839
Total Shareholder
131,378
43,786
59,119
28,473
Unit linked
Equity securities
232,472
229,627
3
2,842
Debt securities
147,998
102,976
42,920
2,102
Derivative assets
2,704
43
2,661
\u2013
Loans at fair value
5,897
\u2013
5,897
\u2013
Investment property
4,797
\u2013
\u2013
4,797
Total Unit linked
393,868
332,646
51,481
9,741
Total financial investments and investment property at fair value
525,246
376,432
110,600
38,214
Debt securities at amortised cost1
6,930
\u2013
43
6,887
Loans at amortised cost 1
194
1
\u2013
193
1. This table includes debt securities and loans which are held at amortised cost on the Consolidated Balance Sheet at a total value of \u00a38,167m.
Total
Level 1
Level 2
Level 3
As at 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Shareholder
Equity securities
2,948
960
170
1,818
Debt securities
78,207
31,714
25,424
21,069
Derivative assets
49,195
7
49,188
\u2013
Loans at fair value
2,630
\u2013
2,630
\u2013
Investment property
5,955
\u2013
\u2013
5,955
Total Shareholder
138,935
32,681
77,412
28,842
Unit linked
Equity securities
198,342
197,532
1
809
Debt securities
148,411
97,799
49,269
1,343
Derivative assets
1,997
84
1,913
\u2013
Loans at fair value
4,772
\u2013
4,772
\u2013
Investment property
3,867
\u2013
\u2013
3,867
Total Unit Linked
357,389
295,415
55,955
6,019
Total financial investments and investment property at fair value
496,324
328,096
133,367
34,861
Debt securities at amortised cost1
7,847
\u2013
43
7,804
Loans at amortised cost 1
84
1
\u2013
83
1. This table includes debt securities and loans which are held at amortised cost on the Consolidated Balance Sheet at a total value of \u00a3 9,049m.
The levels of fair value measurement bases are defined as follows:
\u2022 Level 1: fair values measured using quoted prices (unadjusted) in active markets for identical assets or liabilities.
\u2022 Level 2: fair values measured using valuation techniques for all inputs significant to the measurement other than quoted prices included
within\u00a0Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
\u2022 Level 3: fair values measured using valuation techniques for any input for the asset or liability significant to the measurement that is not
based on\u00a0observable market data (unobservable inputs).
(a) Level 2 assets measured at fair value
All of the Group\u2019s Level 2 assets have been valued using standard market pricing sources, such as IHS Markit, ICE and Bloomberg, or Index
Providers such as Barclays, Merrill Lynch or JPMorgan. Each uses mathematical modelling and multiple source validation in order to
determine consensus prices, with the exception of OTC Derivative holdings; OTCs are marked to market using an in-house system (Lombard
Oberon), external vendor (IHS Markit), internal model or Counterparty Broker marks. In normal market conditions, we would consider these
market prices\u00a0to\u00a0be observable market prices. Following consultation with our pricing providers and a number of their contributing brokers,
we have considered that these prices are not from a suitably active market and have therefore classified them as Level 2.
The Group\u2019s policy is to re-assess categorisation of financial assets at the end of each reporting period and to recognise transfers between
levels\u00a0at that point in time. At 31 December 2025 debt securities totalling net \u00a310bn (2024: \u00a314bn) transferred from Level 2 to Level 1 in
the fair\u00a0value hierarchy.
(b) Level 3 assets measured at fair value
Level 3 assets, where modelling techniques are used, comprise property, unquoted securities, untraded debt securities and securities
where unquoted prices are provided by a single broker. Unquoted securities include suspended securities, investments in private equity
and property vehicles. Untraded debt securities include private placements, commercial real estate loans, income strips, retirement interest
only and other lifetime mortgages.
In many situations, inputs used to measure the fair value of an asset or liability may fall into different levels of the fair value hierarchy.
In\u00a0these situations, the Group determines the level in which the fair value falls based upon the lowest level input that is significant to
the\u00a0determination of\u00a0the fair value. As a result, both observable and unobservable inputs may be used in the determination of fair values
that\u00a0the Group has classified\u00a0within Level 3.
The Group determines the fair values of certain financial assets and liabilities based on quoted market prices, where available. The Group
also determines fair value based on estimated future cash flows discounted at the appropriate current market rate. As appropriate, fair
values reflect adjustments for counterparty credit quality, the Group\u2019s credit standing, liquidity and risk margins on unobservable inputs.
Fair values are subject to a control framework designed to ensure that input variables and outputs are assessed independent of the risk
taker. These inputs and outputs are reviewed and approved by a valuation committee and validated independently as appropriate.
Equity
securities
Other
financial
investments
Investment
property
Total
Equity
securities
Other
financial
investments
Investment
property
Total
2025
2025
2025
2025
2024
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
As at 1 January
2,627
22,412
9,822
34,861
2,392
20,463
8,893
31,748
Transfer to held for sale
(89)
(3,024)
\u2013
(3,113)
\u2013
\u2013
\u2013
\u2013
Total gains/(losses) for the year:
Realised gains or (losses) 1
4
(11)
(64)
(71)
4
(17)
(2)
(15)
Unrealised gains or (losses) 1
(109)
66
156
113
(208)
(278)
(20)
(506)
Purchases/Additions
2,295
5,581
2,007
9,883
789
5,649
1,502
7,940
Sales/Disposals
(301)
(3,098)
(264)
(3,663)
(364)
(3,369)
(552)
(4,285)
Transfers into Level 3
48
320
\u2013
368
\u2013
70
\u2013
70
Transfers out of Level 3
(92)
(36)
\u2013
(128)
\u2013
(144)
\u2013
(144)
Foreign exchange rate movements
(7)
(8)
(21)
(36)
14
38
1
53
As at 31 December
4,376
22,202
11,636
38,214
2,627
22,412
9,822
34,861
1. Realised and unrealised gains/(losses) are recognised in Investment return in the Consolidated Income Statement.
The breakdown below includes assets which are disclosed in Assets of operations classified as held for sale in the Consolidated Balance
Sheet where applicable.
Equity securities
Level 3 equity securities amount to \u00a34,487m (2024: \u00a32,627m), of which the majority is made up of holdings in investment property vehicles
and\u00a0private investment funds. They are valued at the proportion of the Group\u2019s holding of the Net Asset Value reported by the investment
vehicles.\u00a0Other equity securities are valued by a number of third-party specialists using a range of techniques which are often dependent on
the\u00a0maturity of\u00a0the underlying investment but can also depend on the characteristics of individual assets. Such techniques include transaction
values underpinned by analysis of milestone achievement and cash runway for early/start-up stage investments, discounted cash flow
models for\u00a0investments at the next stage of development and earnings multiples for more mature investments.
Other financial investments
Lifetime mortgage (LTM) loans and retirement interest only mortgages amount to \u00a35,756m (2024: \u00a35,861m). Lifetime mortgages are valued
using a discounted cash flow model by projecting best estimate net asset proceeds and discounted using rates inferred from current LTM
loan pricing. The inferred illiquidity premiums for the majority of the portfolio range between 150 and 250bps. (2024: between 150 and
250bps). This\u00a0ensures the value of loans at outset is consistent with the purchase price of the loan and achieves consistency between new
and in-force loans. Lifetime mortgages include a no negative equity guarantee (NNEG) to borrowers. This ensures that if there is a shortfall
between the\u00a0sale proceeds of the property and the outstanding loan balance on redemption of the loan, the value of the loan will be reduced
by this amount. The NNEG on loan redemption is valued as a series of put\u00a0options, which we calculate using a variant of the Black-Scholes
formula. Key assumptions in the valuation of lifetime mortgages include short-term and long-term property growth rates, property index
volatility, voluntary early repayments and longevity assumptions. The valuation as\u00a0at 31 December 2025 reflects a combination of short-
term and long-term property growth rate assumptions equivalent to a flat rate of 3.5% annually (2024: 3.4% annually), after allowing for
the effects of dilapidation. The values of the properties collateralising the LTM loans are updated from the date of the last property valuation
to the valuation date by indexing using UK regional house price indices.
Private credit loans (including commercial real estate loans) amount to \u00a314,511m (2024: \u00a311,779m). Their valuation is determined by
discounted future cash flows which are based on the market yield and spread of the Asset Management approved comparable bonds
and the initial transaction spread, both of which are agreed by S&P Global who also provide an independent verification of the selection of
the comparable bonds. Unobservable inputs that go into the determination of\u00a0comparators include rating, sector, sub-sector, performance
dynamics, financing structure and duration of investment. Existing private credit investments, which were executed as far back as 2011, are
subject to a range of interest rate formats, although the majority are fixed rate. The weighted average duration of the portfolio is 7.0 years
(2024: 7.6 years), with a weighted average life of 10.0 years (2024: 11.0 years). Maturities in the portfolio currently extend out\u00a0to\u00a02074
(2024: to 2074). The private credit portfolio of assets has internal ratings assigned by an independent credit team in line with internally
developed methodologies. These credit ratings range from AAA to BB- (2024: AAA to BB-).
Private placements, all of which relate to held for sale assets, amount to \u00a32,579m (2024: \u00a32,181m). They are valued using a pricing matrix
comprised of a public spread matrix, internal ratings assigned to each holding, average life of each holding and a premium spread matrix. These
are added to the risk-free rate to calculate the discounted cash flows and establish a market value for each investment grade private placement.
Income strip assets amount to \u00a31,272m (2024: \u00a31,280m). Their valuation is outsourced to CBRE who apply a yield to maturity to\u00a0discounted
future cash flows to derive valuations. The overall valuation takes into account the property location, tenant details, tenure, rent, rental break
terms, lease expiries and underlying residual value of the property. The valuation as at 31 December 2025 reflects equivalent yield ranges
between 3% and 18% (2024: between 2% to 17%) and estimated rental values (ERV) between \u00a31 and \u00a326 per sq.ft
(2024: between \u00a37 and \u00a3367 per sq.ft).
Commercial mortgage loans, all of which relate to held for sale assets, amount to \u00a3795m (2024: \u00a3843m) and are determined by incorporating
credit risk for performing loans at the portfolio level and adjusted for loans identified to be distressed at the loan level. The projected cash flows
of each loan are discounted along stochastic risk-free rate paths and are inclusive of an Option Adjusted Spread (OAS), derived from current
internal pricing on new loans, along with\u00a0the best observable inputs.
Other debt securities which are not traded in an active market amount to \u00a3663m (2024: \u00a3468m). They have been valued using third-party
or\u00a0counterparty valuations and these prices are considered to be unobservable due to infrequent market transactions.
Investment property
Level 3 investment property amounting to \u00a311,636m (2024: \u00a39,822m) is valued with the involvement of external valuers. All property
valuations in\u00a0the UK are carried out in accordance with the latest edition of the Valuation Standards published by the Royal Institute of
Chartered Surveyors and are undertaken by appropriately qualified valuers as defined therein. Outside the UK, valuations are produced in
conjunction with external qualified professional values in the countries concerned. Whilst transaction evidence underpins the valuation
process, the definition of market value, including the commentary, in practice requires the valuer to reflect the realities of the current market.
In this context, valuers must use their market\u00a0knowledge and professional judgement and not rely only upon market sentiment based on
historic transactional comparables.
The valuation of investment properties also includes an income approach that is based on current rental income plus anticipated uplifts,
where\u00a0the uplift and discount rates are derived from rates implied by recent market transactions. These inputs are deemed unobservable.
The\u00a0valuation as at 31 December 2025 reflects equivalent yield ranges between 1% and 53% (2024: between 1% and 53%) and Estimated
Rental Value (ERV) between \u00a31 and \u00a3219 per sq.ft (2024: between \u00a32 and \u00a3369 per sq.ft).
The table below shows the valuation of investment property by sector:
2025
2024
\u00a3m
\u00a3m
Retail
1,351
1,242
Leisure
580
493
Distribution
1,279
1,058
Office Space
3,267
2,876
Industrial and other commercial
2,306
1,805
Accommodation
2,853
2,348
Total investment property
11,636
9,822
c) Effect of changes in assumptions on Level 3 assets
Fair values of financial instruments are, in certain circumstances, measured using valuation techniques that incorporate assumptions that are
not\u00a0evidenced by prices from observable current market transactions in the same instrument and are not based on observable market data.
Where material, the Group assesses the sensitivity of fair values of Level 3 investments to changes in unobservable inputs to reasonable
alternative assumptions. The table below shows the impact of applying these sensitivities to the fair value of Level 3 assets as at
31 December 2025, including assets which are part of operations classified as held for sale. Further disclosure on how these sensitivities
have been applied can be found in the descriptions following the table.
Sensitivities
Fair value 2025
Positive impact
Negative impact
\u00a3m
\u00a3m
\u00a3m
Lifetime mortgages
5,756
204
(246)
Private credit portfolios
17,885
756
(756)
Investment property
11,636
943
(926)
Other investments1
6,422
396
(479)
Total Level 3 assets
41,699
2,299
(2,407)
1. Other investments include Level 3 equity securities, income strip assets and other traded debt securities which are Level 3.
The sensitivities are not a function of sensitising a single variable relating to the valuation of the asset, but rather a function of flexing
multiple factors often at individual asset level. The following sets out a number of key factors by asset type and how they have been
flexed to derive reasonable alternative valuations.
Lifetime mortgages
Key assumptions used in the valuation of lifetime mortgage assets are listed in Note 13(ii)(b) and sensitivities are applied to each assumption
which are used to derive the values in the above table. The most significant increase in value is a 20bps reduction in the discount rate which,
applied in isolation produces a sensitised value of \u00a3134m. The most significant decrease in value is a 20bps increase in the discount rate
which, applied in isolation produces a sensitised value of \u00a3(130)m.
Private credit portfolios
The sensitivity in the private credit portfolio has been determined through a method which estimates investment spread value premium
differences as compared to the institutional investment market. Individual investment characteristics of each holding, such as credit rating
and duration are used to determine spread differentials for the purposes of determining alternate values. Spread differentials are determined
to be lower for highly rated and/or shorter duration assets as compared to lower rated and/or longer duration assets. A significant component of
the spread differential is in relation to the selection of comparator bonds, which is the potential difference in spread of the basket of relevant
comparators determined by respective investors. If we were to take an AA rated asset it may attract a spread differential of 30bps on the
selection of comparator bonds as opposed to 45bps for a similar duration BBB rated asset. Applied in isolation the sensitivity used to reflect
the spread in comparator bond selection results in sensitised values of \u00a3260m and \u00a3(260)m.
Investment property
Investment property holdings are valued by independent valuers on the basis of open market value as defined in the appraisal and valuation
manual of the Royal Institute of Chartered Surveyors (RICS). As such, sensitivities are calculated through a mixture of asset level and portfolio
level methodologies which make reference to individual investment characteristics of the holding but do not flex individual assumptions
used by the independent expert in valuing the holdings. Valuation uncertainty is assessed using three methodologies that are each applied
independently and then weighted equally to determine the overall portfolio sensitivity: (i) acceptable margin of error approach reflecting
real asset valuation specialists view on uncertainty, (ii) an fixed income approach that derives sensitivities for each asset using duration,
credit rating and inflation linkage to determine asset\u2011specific stress factors and (iii) a property yield approach that flexes valuation yields by
reference to remaining term and credit rating (for example, AA rated asset with remaining term of 25 years in normal market conditions this
would lead to a 15bps yield flex as opposed to a 35bps yield flex for a BBB rated asset with a 30 year remaining term). While these three
methodologies are combined to produce a weighted average sensitivity on Sales and Leaseback and Build to Rent portfolio. Other portfolios
apply margin of error sensitivity.
The methodology which leads to the most significant sensitivity at the balance sheet date is an acceptable margin of error reflecting real
asset valuation specialists view on uncertainty of 10% either way, subject to the valuation being undertaken with due care. If this sensitivity
were to be taken without a weighting it would produce sensitised values of \u00a3587m and \u00a3(587)m.
It should be noted that some sensitivities described above are non-linear and larger or smaller impacts should not be interpolated or
extrapolated from these results.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-672": { "value": "
14. Derivative assets and liabilities
The Group uses derivatives as a component of efficient portfolio management. This includes, but is not limited to, hedging economic exposure to
foreign currencies, interest rates, inflation and credit risks. The Group uses hedge accounting, provided the prescribed criteria in IFRS 9, \u2018Financial
Instruments\u2019 are met, to recognise the offsetting effects of changes in the fair value or cash flow of the derivative instrument and the hedged item.
Hedge accounting
The Group is exposed to foreign currency risk to the extent that there is a mismatch between the currencies in which cash flows are required
to be settled in and the functional currency of the Group.
Currently, the Group uses cash flow hedge accounting and hedges foreign exchange risk on:
\u2022 fixed rate USD denominated borrowings (the hedged items), using cross-currency interest rate swaps (the hedging instrument)
\u2022 fixed rate EUR denominated borrowings (the hedged items), using a cross-currency interest rate swap (the hedging instrument)
\u2022 the forecast sale proceeds arising from the disposal of the shares held in Legal & General America Inc (the hedged item), using forward
exchange contracts (the hedging instruments).
The Group's risk management policy is to mitigate foreign currency risk from fluctuations in the EUR or USD exchange rate. These risks stem
from cash flows under the USD and EUR denominated borrowings and the forecast sales proceeds in USD.
The Group applies a hedge ratio of 1:1 for its USD denominated borrowing and a hedge ratio of 1:2 for its EUR denominated borrowing to
balance yield with prudent risk management. The Group applies a hedge ratio of 1:1 for hedging the forecast sale proceeds arising from the
disposal of the shares held in Legal & General America Inc.
The Group determines the existence of an economic relationship between the hedging instruments and the hedged items based on the
currency, amount and timing of the respective cash flows. In these hedging relationships, the main sources of ineffectiveness are:
\u2022 the fair value of the hedging instrument on the hedge relationship designation date (if not zero)
\u2022 changes in the contractual terms or timing of the payments on the hedged item
\u2022 a change in the credit risk of L&G Group Plc or the counterparty to the cross-currency interest rate swap.
Cash flow hedges \u2013 cross-currency swap contracts
The Group has the following cross-currency hedge arrangements:
\u2022 The Group has entered into fixed rate borrowings denominated in USD and is therefore exposed to foreign exchange risk. In order to
hedge this risk the Group has entered into cross-currency interest rate swaps, enabling the exposure to be swapped into a fixed rate in\u00a0
its functional currency. These had a net liabilities fair value totalling \u00a346m (2024: net asset fair value \u00a342m) and a notional amount of
\u00a31,099m at 31 December 2025 (2024: \u00a31,099m). There was no ineffectiveness recognised in the income statement in respect of these
hedges during 2025. The maturity of the swaps are March 2027 and April 2032.
\u2022 The Group has entered into fixed rate borrowings denominated in EUR and is therefore exposed to foreign exchange risk. In order to
hedge this risk the Group has entered into a cross-currency interest rate swap, enabling the exposure to be swapped into a fixed rate in its
functional currency. These had a net liabilities fair value totalling \u00a314m (2024: \u00a3nil) and a notional amount of \u00a3302m at 31 December
2025 (2024: \u00a3nil). Ineffectiveness recognised in Investment Return was \u00a30.9m in respect of these hedges during 2025. The swap matures
in September 2035.
The amounts recognised in the cash flow hedging reserve will be reclassified to the Consolidated Income Statement to the extent that the
borrowings impact profit or loss through the accrual of interest or the translation of the foreign currency denominated debt at the reporting
date. The average fixed interest rate of the cross-currency swap contracts was 4.3%.
Cash flow hedges - forward exchange contracts
The Group is exposed to foreign currency risks arising from the $2.6bn sales proceeds of the disposal of the shares held in Legal & General
America Inc. In order to mitigate these risks, the Group has entered into forward exchange contracts and designated the hedging relationship
and applied cash flow hedge accounting.
These contracts had a net asset fair value totalling \u00a353m (2024: \u00a3nil) and a total notional amount of \u00a31,243m at 31 December 2025 with an
average forward rate of 1.29. Contracts with a total notional amount of \u00a3643m mature on 27 February 2026 and the remaining contracts
with a total notional amount of \u00a3600m mature on 30 June 2026.
The amounts recognised in the cash flow hedging reserve will be reclassified to the Consolidated Income Statement on completion of the
disposal. There was no ineffectiveness recognised in the income statement in respect of these hedges during 2025.
Reconciliation of equity balances for each type of risk category
The following table provides a reconciliation by risk category of components of equity and analysis of OCI items resulting from cash flow
hedge accounting.
Hedging reserve
Foreign currency risk
\u00a3m
As at 1 January 2025
48
Changes in fair value of the hedging instrument
32
Amount reclassified to investment return
12
Related tax
2
As at 31 December 2025
94
Hedging reserve
Foreign currency risk
\u00a3m
As at 1 January 2024
46
Changes in fair value of the hedging instrument
3
Amount reclassified to investment return
\u2013
Related tax
(1)
As at 31 December 2024
48
Other derivative contracts \u2013 held for trading
The Group uses certain derivative contracts which are effective hedges of economic exposures in accordance with the Group\u2019s risk management
policy, but for various reasons are not designated within a formal hedge accounting relationship. Therefore, these contracts must be designated as
held for trading and gains and losses on these contracts are recognised immediately in the Consolidated Income\u00a0Statement.
Fair values
Fair values
Assets1
Liabilities2
Assets1
Liabilities2
2025
2025
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Shareholder derivatives:
Interest rate contracts \u2013 held for trading
29,523
30,723
38,914
39,895
Forward exchange contracts \u2013 held for trading
16
9
35
31
Forward exchange contracts - cash flow hedge
53
\u2013
\u2013
\u2013
Cross-currency swap contracts \u2013 held for trading
1,771
3,461
1,009
2,323
Cross-currency swap contracts \u2013 cash flow hedge
7
67
42
\u2013
Inflation swap contracts \u2013 held for trading
10,202
14,739
9,176
11,595
Credit derivatives \u2013 held for trading
2
13
\u2013
18
Equity/index derivatives \u2013 held for trading
5
3
2
4
Other derivatives \u2013 held for trading
46
436
17
408
Total shareholder derivatives
41,625
49,451
49,195
54,274
Unit linked derivatives:
Interest rate contracts \u2013 held for trading
409
1,364
564
2,082
Forward foreign exchange contracts \u2013 held for trading
1,806
235
558
1,077
Credit derivatives \u2013 held for trading
2
3
2
1
Inflation swap contracts \u2013 held for trading
362
89
758
175
Equity/index derivatives \u2013 held for trading
65
32
37
228
Other derivatives \u2013 held for trading
60
44
78
36
Total unit linked derivatives
2,704
1,767
1,997
3,599
Total derivative assets and liabilities
44,329
51,218
51,192
57,873
1.Derivative assets are reported in the Consolidated Balance Sheet within Financial investments and investment property (Note 13).
2.Derivative liabilities are reported in the Consolidated Balance Sheet within Payables and other financial liabilities (Note 26).
The contractual undiscounted cash flows in relation to non-unit linked derivatives have the following maturity profile. Unit linked derivatives
have not been included as shareholders are not directly exposed to liquidity risks.
Maturity profile of undiscounted cashflows
Fair values
Within 1
year
1-5 years
5-15 years
15-25 years
Over 25
years
Total
As at 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Cash inflows
Shareholder derivatives
Derivative assets
41,625
17,810
45,791
65,608
32,514
17,792
179,515
Derivative liabilities
(49,451)
10,068
33,390
48,620
23,390
12,873
128,341
Total
(7,826)
27,878
79,181
114,228
55,904
30,665
307,856
Cash outflows
Shareholder derivatives
Derivative assets
41,625
(14,679)
(36,751)
(48,353)
(23,807)
(14,355)
(137,945)
Derivative liabilities
(49,451)
(12,815)
(41,969)
(64,318)
(35,801)
(22,046)
(176,949)
Total
(7,826)
(27,494)
(78,720)
(112,671)
(59,608)
(36,401)
(314,894)
Net cash flows
384
461
1,557
(3,704)
(5,736)
(7,038)
Maturity profile of undiscounted cashflows
Fair values
Within 1 year
1-5 years
5-15 years
15-25 years
Over 25
years
Total
As at 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Cash inflows
Shareholder derivatives
Derivative assets
49,195
23,319
57,912
75,704
33,823
18,909
209,667
Derivative liabilities
(54,274)
14,840
39,656
53,019
23,103
14,275
144,893
Total
(5,079)
38,159
97,568
128,723
56,926
33,184
354,560
Cash outflows
Shareholder derivatives
Derivative assets
49,195
(15,374)
(40,194)
(49,928)
(22,692)
(14,175)
(142,363)
Derivative liabilities
(54,274)
(23,758)
(60,276)
(80,320)
(35,843)
(23,122)
(223,319)
Total
(5,079)
(39,132)
(100,470)
(130,248)
(58,535)
(37,297)
(365,682)
Net cash flows
(973)
(2,902)
(1,525)
(1,609)
(4,113)
(11,122)
Future cash flows on the floating legs of interest rate and exchange derivatives are calculated using current spot rates, which may differ from
the market expectation incorporated in the fair value.
Cash flows arising from implied events covered by credit derivatives are presented in the tables above on an expected basis as cash flows
within\u00a0one year.
Cash inflows or outflows are presented on a net basis where the Group is required to settle net or has a legally enforceable right of offset
and the intention is to settle on a net basis.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-671": { "value": "
14. Derivative assets and liabilities
The Group uses derivatives as a component of efficient portfolio management. This includes, but is not limited to, hedging economic exposure to
foreign currencies, interest rates, inflation and credit risks. The Group uses hedge accounting, provided the prescribed criteria in IFRS 9, \u2018Financial
Instruments\u2019 are met, to recognise the offsetting effects of changes in the fair value or cash flow of the derivative instrument and the hedged item.
Hedge accounting
The Group is exposed to foreign currency risk to the extent that there is a mismatch between the currencies in which cash flows are required
to be settled in and the functional currency of the Group.
Currently, the Group uses cash flow hedge accounting and hedges foreign exchange risk on:
\u2022 fixed rate USD denominated borrowings (the hedged items), using cross-currency interest rate swaps (the hedging instrument)
\u2022 fixed rate EUR denominated borrowings (the hedged items), using a cross-currency interest rate swap (the hedging instrument)
\u2022 the forecast sale proceeds arising from the disposal of the shares held in Legal & General America Inc (the hedged item), using forward
exchange contracts (the hedging instruments).
The Group's risk management policy is to mitigate foreign currency risk from fluctuations in the EUR or USD exchange rate. These risks stem
from cash flows under the USD and EUR denominated borrowings and the forecast sales proceeds in USD.
The Group applies a hedge ratio of 1:1 for its USD denominated borrowing and a hedge ratio of 1:2 for its EUR denominated borrowing to
balance yield with prudent risk management. The Group applies a hedge ratio of 1:1 for hedging the forecast sale proceeds arising from the
disposal of the shares held in Legal & General America Inc.
The Group determines the existence of an economic relationship between the hedging instruments and the hedged items based on the
currency, amount and timing of the respective cash flows. In these hedging relationships, the main sources of ineffectiveness are:
\u2022 the fair value of the hedging instrument on the hedge relationship designation date (if not zero)
\u2022 changes in the contractual terms or timing of the payments on the hedged item
\u2022 a change in the credit risk of L&G Group Plc or the counterparty to the cross-currency interest rate swap.
Cash flow hedges \u2013 cross-currency swap contracts
The Group has the following cross-currency hedge arrangements:
\u2022 The Group has entered into fixed rate borrowings denominated in USD and is therefore exposed to foreign exchange risk. In order to
hedge this risk the Group has entered into cross-currency interest rate swaps, enabling the exposure to be swapped into a fixed rate in\u00a0
its functional currency. These had a net liabilities fair value totalling \u00a346m (2024: net asset fair value \u00a342m) and a notional amount of
\u00a31,099m at 31 December 2025 (2024: \u00a31,099m). There was no ineffectiveness recognised in the income statement in respect of these
hedges during 2025. The maturity of the swaps are March 2027 and April 2032.
\u2022 The Group has entered into fixed rate borrowings denominated in EUR and is therefore exposed to foreign exchange risk. In order to
hedge this risk the Group has entered into a cross-currency interest rate swap, enabling the exposure to be swapped into a fixed rate in its
functional currency. These had a net liabilities fair value totalling \u00a314m (2024: \u00a3nil) and a notional amount of \u00a3302m at 31 December
2025 (2024: \u00a3nil). Ineffectiveness recognised in Investment Return was \u00a30.9m in respect of these hedges during 2025. The swap matures
in September 2035.
The amounts recognised in the cash flow hedging reserve will be reclassified to the Consolidated Income Statement to the extent that the
borrowings impact profit or loss through the accrual of interest or the translation of the foreign currency denominated debt at the reporting
date. The average fixed interest rate of the cross-currency swap contracts was 4.3%.
Cash flow hedges - forward exchange contracts
The Group is exposed to foreign currency risks arising from the $2.6bn sales proceeds of the disposal of the shares held in Legal & General
America Inc. In order to mitigate these risks, the Group has entered into forward exchange contracts and designated the hedging relationship
and applied cash flow hedge accounting.
These contracts had a net asset fair value totalling \u00a353m (2024: \u00a3nil) and a total notional amount of \u00a31,243m at 31 December 2025 with an
average forward rate of 1.29. Contracts with a total notional amount of \u00a3643m mature on 27 February 2026 and the remaining contracts
with a total notional amount of \u00a3600m mature on 30 June 2026.
The amounts recognised in the cash flow hedging reserve will be reclassified to the Consolidated Income Statement on completion of the
disposal. There was no ineffectiveness recognised in the income statement in respect of these hedges during 2025.
Reconciliation of equity balances for each type of risk category
The following table provides a reconciliation by risk category of components of equity and analysis of OCI items resulting from cash flow
hedge accounting.
Hedging reserve
Foreign currency risk
\u00a3m
As at 1 January 2025
48
Changes in fair value of the hedging instrument
32
Amount reclassified to investment return
12
Related tax
2
As at 31 December 2025
94
Hedging reserve
Foreign currency risk
\u00a3m
As at 1 January 2024
46
Changes in fair value of the hedging instrument
3
Amount reclassified to investment return
\u2013
Related tax
(1)
As at 31 December 2024
48
Other derivative contracts \u2013 held for trading
The Group uses certain derivative contracts which are effective hedges of economic exposures in accordance with the Group\u2019s risk management
policy, but for various reasons are not designated within a formal hedge accounting relationship. Therefore, these contracts must be designated as
held for trading and gains and losses on these contracts are recognised immediately in the Consolidated Income\u00a0Statement.
Fair values
Fair values
Assets1
Liabilities2
Assets1
Liabilities2
2025
2025
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Shareholder derivatives:
Interest rate contracts \u2013 held for trading
29,523
30,723
38,914
39,895
Forward exchange contracts \u2013 held for trading
16
9
35
31
Forward exchange contracts - cash flow hedge
53
\u2013
\u2013
\u2013
Cross-currency swap contracts \u2013 held for trading
1,771
3,461
1,009
2,323
Cross-currency swap contracts \u2013 cash flow hedge
7
67
42
\u2013
Inflation swap contracts \u2013 held for trading
10,202
14,739
9,176
11,595
Credit derivatives \u2013 held for trading
2
13
\u2013
18
Equity/index derivatives \u2013 held for trading
5
3
2
4
Other derivatives \u2013 held for trading
46
436
17
408
Total shareholder derivatives
41,625
49,451
49,195
54,274
Unit linked derivatives:
Interest rate contracts \u2013 held for trading
409
1,364
564
2,082
Forward foreign exchange contracts \u2013 held for trading
1,806
235
558
1,077
Credit derivatives \u2013 held for trading
2
3
2
1
Inflation swap contracts \u2013 held for trading
362
89
758
175
Equity/index derivatives \u2013 held for trading
65
32
37
228
Other derivatives \u2013 held for trading
60
44
78
36
Total unit linked derivatives
2,704
1,767
1,997
3,599
Total derivative assets and liabilities
44,329
51,218
51,192
57,873
1.Derivative assets are reported in the Consolidated Balance Sheet within Financial investments and investment property (Note 13).
2.Derivative liabilities are reported in the Consolidated Balance Sheet within Payables and other financial liabilities (Note 26).
The contractual undiscounted cash flows in relation to non-unit linked derivatives have the following maturity profile. Unit linked derivatives
have not been included as shareholders are not directly exposed to liquidity risks.
Maturity profile of undiscounted cashflows
Fair values
Within 1
year
1-5 years
5-15 years
15-25 years
Over 25
years
Total
As at 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Cash inflows
Shareholder derivatives
Derivative assets
41,625
17,810
45,791
65,608
32,514
17,792
179,515
Derivative liabilities
(49,451)
10,068
33,390
48,620
23,390
12,873
128,341
Total
(7,826)
27,878
79,181
114,228
55,904
30,665
307,856
Cash outflows
Shareholder derivatives
Derivative assets
41,625
(14,679)
(36,751)
(48,353)
(23,807)
(14,355)
(137,945)
Derivative liabilities
(49,451)
(12,815)
(41,969)
(64,318)
(35,801)
(22,046)
(176,949)
Total
(7,826)
(27,494)
(78,720)
(112,671)
(59,608)
(36,401)
(314,894)
Net cash flows
384
461
1,557
(3,704)
(5,736)
(7,038)
Maturity profile of undiscounted cashflows
Fair values
Within 1 year
1-5 years
5-15 years
15-25 years
Over 25
years
Total
As at 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Cash inflows
Shareholder derivatives
Derivative assets
49,195
23,319
57,912
75,704
33,823
18,909
209,667
Derivative liabilities
(54,274)
14,840
39,656
53,019
23,103
14,275
144,893
Total
(5,079)
38,159
97,568
128,723
56,926
33,184
354,560
Cash outflows
Shareholder derivatives
Derivative assets
49,195
(15,374)
(40,194)
(49,928)
(22,692)
(14,175)
(142,363)
Derivative liabilities
(54,274)
(23,758)
(60,276)
(80,320)
(35,843)
(23,122)
(223,319)
Total
(5,079)
(39,132)
(100,470)
(130,248)
(58,535)
(37,297)
(365,682)
Net cash flows
(973)
(2,902)
(1,525)
(1,609)
(4,113)
(11,122)
Future cash flows on the floating legs of interest rate and exchange derivatives are calculated using current spot rates, which may differ from
the market expectation incorporated in the fair value.
Cash flows arising from implied events covered by credit derivatives are presented in the tables above on an expected basis as cash flows
within\u00a0one year.
Cash inflows or outflows are presented on a net basis where the Group is required to settle net or has a legally enforceable right of offset
and the intention is to settle on a net basis.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralHedgeAccountingExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-674": { "value": "
Other derivative contracts \u2013 held for trading
The Group uses certain derivative contracts which are effective hedges of economic exposures in accordance with the Group\u2019s risk management
policy, but for various reasons are not designated within a formal hedge accounting relationship. Therefore, these contracts must be designated as
held for trading and gains and losses on these contracts are recognised immediately in the Consolidated Income\u00a0Statement.
Fair values
Fair values
Assets1
Liabilities2
Assets1
Liabilities2
2025
2025
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Shareholder derivatives:
Interest rate contracts \u2013 held for trading
29,523
30,723
38,914
39,895
Forward exchange contracts \u2013 held for trading
16
9
35
31
Forward exchange contracts - cash flow hedge
53
\u2013
\u2013
\u2013
Cross-currency swap contracts \u2013 held for trading
1,771
3,461
1,009
2,323
Cross-currency swap contracts \u2013 cash flow hedge
7
67
42
\u2013
Inflation swap contracts \u2013 held for trading
10,202
14,739
9,176
11,595
Credit derivatives \u2013 held for trading
2
13
\u2013
18
Equity/index derivatives \u2013 held for trading
5
3
2
4
Other derivatives \u2013 held for trading
46
436
17
408
Total shareholder derivatives
41,625
49,451
49,195
54,274
Unit linked derivatives:
Interest rate contracts \u2013 held for trading
409
1,364
564
2,082
Forward foreign exchange contracts \u2013 held for trading
1,806
235
558
1,077
Credit derivatives \u2013 held for trading
2
3
2
1
Inflation swap contracts \u2013 held for trading
362
89
758
175
Equity/index derivatives \u2013 held for trading
65
32
37
228
Other derivatives \u2013 held for trading
60
44
78
36
Total unit linked derivatives
2,704
1,767
1,997
3,599
Total derivative assets and liabilities
44,329
51,218
51,192
57,873
1.Derivative assets are reported in the Consolidated Balance Sheet within Financial investments and investment property (Note 13).
2.Derivative liabilities are reported in the Consolidated Balance Sheet within Payables and other financial liabilities (Note 26).
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialLiabilitiesHeldForTradingExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-673": { "value": "
Other derivative contracts \u2013 held for trading
The Group uses certain derivative contracts which are effective hedges of economic exposures in accordance with the Group\u2019s risk management
policy, but for various reasons are not designated within a formal hedge accounting relationship. Therefore, these contracts must be designated as
held for trading and gains and losses on these contracts are recognised immediately in the Consolidated Income\u00a0Statement.
Fair values
Fair values
Assets1
Liabilities2
Assets1
Liabilities2
2025
2025
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Shareholder derivatives:
Interest rate contracts \u2013 held for trading
29,523
30,723
38,914
39,895
Forward exchange contracts \u2013 held for trading
16
9
35
31
Forward exchange contracts - cash flow hedge
53
\u2013
\u2013
\u2013
Cross-currency swap contracts \u2013 held for trading
1,771
3,461
1,009
2,323
Cross-currency swap contracts \u2013 cash flow hedge
7
67
42
\u2013
Inflation swap contracts \u2013 held for trading
10,202
14,739
9,176
11,595
Credit derivatives \u2013 held for trading
2
13
\u2013
18
Equity/index derivatives \u2013 held for trading
5
3
2
4
Other derivatives \u2013 held for trading
46
436
17
408
Total shareholder derivatives
41,625
49,451
49,195
54,274
Unit linked derivatives:
Interest rate contracts \u2013 held for trading
409
1,364
564
2,082
Forward foreign exchange contracts \u2013 held for trading
1,806
235
558
1,077
Credit derivatives \u2013 held for trading
2
3
2
1
Inflation swap contracts \u2013 held for trading
362
89
758
175
Equity/index derivatives \u2013 held for trading
65
32
37
228
Other derivatives \u2013 held for trading
60
44
78
36
Total unit linked derivatives
2,704
1,767
1,997
3,599
Total derivative assets and liabilities
44,329
51,218
51,192
57,873
1.Derivative assets are reported in the Consolidated Balance Sheet within Financial investments and investment property (Note 13).
2.Derivative liabilities are reported in the Consolidated Balance Sheet within Payables and other financial liabilities (Note 26).
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsHeldForTradingExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-680": { "value": "
15. Receivables and other assets
2025
2024
Notes
\u00a3m
\u00a3m
Receivables under finance leases
15(i)
555
531
Accrued interest and rent
310
470
Prepayments and accrued income
385
375
Inventories1
395
531
Contract assets 2
155
149
Other receivables3
4,421
6,571
Total receivables and other assets
6,221
8,627
Due within 12 months
5,093
7,413
Due after 12 months
1,128
1,214
1. Inventories represent house building stock including land, options on land, work in progress and other inventory.
2. Contract assets represent the entity\u2019s right to consideration in exchange for goods or services that have been transferred to a customer.
3. Other receivables include amounts receivable from brokers and clients for investing activities, collateral pledges, unsettled cash, FX spots and other sundry balances, as well as \u00a3452m
(2024: \u00a3508m) of deferred consideration relating to the Cala disposal in 2024.
(i) Receivables under finance leases
The Group acts as a lessor of certain finance leases, which have a weighted average duration to maturity of 33 years as at 31 December 2025
( 2024: 34 years). The counterparties, as lessee, are regarded to be the economic owner of the leased assets.
The future minimum lease payments under the arrangement, together with the present value, are disclosed below:
Total future
payments
Unearned
interest\u00a0income
Present value
Total future
payments
Unearned
interest\u00a0income
Present value
2025
2025
2025
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Within 1 year
32
(24)
8
29
(22)
7
1-2 years
30
(23)
7
30
(22)
8
2-3 years
31
(23)
8
28
(21)
7
3-4 years
32
(23)
9
29
(21)
8
4-5 years
32
(22)
10
30
(21)
9
After 5 years
906
(393)
513
878
(386)
492
Total
1,063
(508)
555
1,024
(493)
531
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherAssetsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-679": { "value": "
15. Receivables and other assets
2025
2024
Notes
\u00a3m
\u00a3m
Receivables under finance leases
15(i)
555
531
Accrued interest and rent
310
470
Prepayments and accrued income
385
375
Inventories1
395
531
Contract assets 2
155
149
Other receivables3
4,421
6,571
Total receivables and other assets
6,221
8,627
Due within 12 months
5,093
7,413
Due after 12 months
1,128
1,214
1. Inventories represent house building stock including land, options on land, work in progress and other inventory.
2. Contract assets represent the entity\u2019s right to consideration in exchange for goods or services that have been transferred to a customer.
3. Other receivables include amounts receivable from brokers and clients for investing activities, collateral pledges, unsettled cash, FX spots and other sundry balances, as well as \u00a3452m
(2024: \u00a3508m) of deferred consideration relating to the Cala disposal in 2024.
(i) Receivables under finance leases
The Group acts as a lessor of certain finance leases, which have a weighted average duration to maturity of 33 years as at 31 December 2025
( 2024: 34 years). The counterparties, as lessee, are regarded to be the economic owner of the leased assets.
The future minimum lease payments under the arrangement, together with the present value, are disclosed below:
Total future
payments
Unearned
interest\u00a0income
Present value
Total future
payments
Unearned
interest\u00a0income
Present value
2025
2025
2025
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Within 1 year
32
(24)
8
29
(22)
7
1-2 years
30
(23)
7
30
(22)
8
2-3 years
31
(23)
8
28
(21)
7
3-4 years
32
(23)
9
29
(21)
8
4-5 years
32
(22)
10
30
(21)
9
After 5 years
906
(393)
513
878
(386)
492
Total
1,063
(508)
555
1,024
(493)
531
", "dimensions": { "concept": "ifrs-full:DisclosureOfInventoriesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-678": { "value": "
15. Receivables and other assets
2025
2024
Notes
\u00a3m
\u00a3m
Receivables under finance leases
15(i)
555
531
Accrued interest and rent
310
470
Prepayments and accrued income
385
375
Inventories1
395
531
Contract assets 2
155
149
Other receivables3
4,421
6,571
Total receivables and other assets
6,221
8,627
Due within 12 months
5,093
7,413
Due after 12 months
1,128
1,214
1. Inventories represent house building stock including land, options on land, work in progress and other inventory.
2. Contract assets represent the entity\u2019s right to consideration in exchange for goods or services that have been transferred to a customer.
3. Other receivables include amounts receivable from brokers and clients for investing activities, collateral pledges, unsettled cash, FX spots and other sundry balances, as well as \u00a3452m
(2024: \u00a3508m) of deferred consideration relating to the Cala disposal in 2024.
(i) Receivables under finance leases
The Group acts as a lessor of certain finance leases, which have a weighted average duration to maturity of 33 years as at 31 December 2025
( 2024: 34 years). The counterparties, as lessee, are regarded to be the economic owner of the leased assets.
The future minimum lease payments under the arrangement, together with the present value, are disclosed below:
Total future
payments
Unearned
interest\u00a0income
Present value
Total future
payments
Unearned
interest\u00a0income
Present value
2025
2025
2025
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Within 1 year
32
(24)
8
29
(22)
7
1-2 years
30
(23)
7
30
(22)
8
2-3 years
31
(23)
8
28
(21)
7
3-4 years
32
(23)
9
29
(21)
8
4-5 years
32
(22)
10
30
(21)
9
After 5 years
906
(393)
513
878
(386)
492
Total
1,063
(508)
555
1,024
(493)
531
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherCurrentAssetsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-677": { "value": "
15. Receivables and other assets
2025
2024
Notes
\u00a3m
\u00a3m
Receivables under finance leases
15(i)
555
531
Accrued interest and rent
310
470
Prepayments and accrued income
385
375
Inventories1
395
531
Contract assets 2
155
149
Other receivables3
4,421
6,571
Total receivables and other assets
6,221
8,627
Due within 12 months
5,093
7,413
Due after 12 months
1,128
1,214
1. Inventories represent house building stock including land, options on land, work in progress and other inventory.
2. Contract assets represent the entity\u2019s right to consideration in exchange for goods or services that have been transferred to a customer.
3. Other receivables include amounts receivable from brokers and clients for investing activities, collateral pledges, unsettled cash, FX spots and other sundry balances, as well as \u00a3452m
(2024: \u00a3508m) of deferred consideration relating to the Cala disposal in 2024.
(i) Receivables under finance leases
The Group acts as a lessor of certain finance leases, which have a weighted average duration to maturity of 33 years as at 31 December 2025
( 2024: 34 years). The counterparties, as lessee, are regarded to be the economic owner of the leased assets.
The future minimum lease payments under the arrangement, together with the present value, are disclosed below:
Total future
payments
Unearned
interest\u00a0income
Present value
Total future
payments
Unearned
interest\u00a0income
Present value
2025
2025
2025
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Within 1 year
32
(24)
8
29
(22)
7
1-2 years
30
(23)
7
30
(22)
8
2-3 years
31
(23)
8
28
(21)
7
3-4 years
32
(23)
9
29
(21)
8
4-5 years
32
(22)
10
30
(21)
9
After 5 years
906
(393)
513
878
(386)
492
Total
1,063
(508)
555
1,024
(493)
531
", "dimensions": { "concept": "ifrs-full:DisclosureOfPrepaymentsAndOtherAssetsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-676": { "value": "
15. Receivables and other assets
2025
2024
Notes
\u00a3m
\u00a3m
Receivables under finance leases
15(i)
555
531
Accrued interest and rent
310
470
Prepayments and accrued income
385
375
Inventories1
395
531
Contract assets 2
155
149
Other receivables3
4,421
6,571
Total receivables and other assets
6,221
8,627
Due within 12 months
5,093
7,413
Due after 12 months
1,128
1,214
1. Inventories represent house building stock including land, options on land, work in progress and other inventory.
2. Contract assets represent the entity\u2019s right to consideration in exchange for goods or services that have been transferred to a customer.
3. Other receivables include amounts receivable from brokers and clients for investing activities, collateral pledges, unsettled cash, FX spots and other sundry balances, as well as \u00a3452m
(2024: \u00a3508m) of deferred consideration relating to the Cala disposal in 2024.
(i) Receivables under finance leases
The Group acts as a lessor of certain finance leases, which have a weighted average duration to maturity of 33 years as at 31 December 2025
( 2024: 34 years). The counterparties, as lessee, are regarded to be the economic owner of the leased assets.
The future minimum lease payments under the arrangement, together with the present value, are disclosed below:
Total future
payments
Unearned
interest\u00a0income
Present value
Total future
payments
Unearned
interest\u00a0income
Present value
2025
2025
2025
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Within 1 year
32
(24)
8
29
(22)
7
1-2 years
30
(23)
7
30
(22)
8
2-3 years
31
(23)
8
28
(21)
7
3-4 years
32
(23)
9
29
(21)
8
4-5 years
32
(22)
10
30
(21)
9
After 5 years
906
(393)
513
878
(386)
492
Total
1,063
(508)
555
1,024
(493)
531
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherNoncurrentAssetsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-675": { "value": "
15. Receivables and other assets
2025
2024
Notes
\u00a3m
\u00a3m
Receivables under finance leases
15(i)
555
531
Accrued interest and rent
310
470
Prepayments and accrued income
385
375
Inventories1
395
531
Contract assets 2
155
149
Other receivables3
4,421
6,571
Total receivables and other assets
6,221
8,627
Due within 12 months
5,093
7,413
Due after 12 months
1,128
1,214
1. Inventories represent house building stock including land, options on land, work in progress and other inventory.
2. Contract assets represent the entity\u2019s right to consideration in exchange for goods or services that have been transferred to a customer.
3. Other receivables include amounts receivable from brokers and clients for investing activities, collateral pledges, unsettled cash, FX spots and other sundry balances, as well as \u00a3452m
(2024: \u00a3508m) of deferred consideration relating to the Cala disposal in 2024.
(i) Receivables under finance leases
The Group acts as a lessor of certain finance leases, which have a weighted average duration to maturity of 33 years as at 31 December 2025
( 2024: 34 years). The counterparties, as lessee, are regarded to be the economic owner of the leased assets.
The future minimum lease payments under the arrangement, together with the present value, are disclosed below:
Total future
payments
Unearned
interest\u00a0income
Present value
Total future
payments
Unearned
interest\u00a0income
Present value
2025
2025
2025
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Within 1 year
32
(24)
8
29
(22)
7
1-2 years
30
(23)
7
30
(22)
8
2-3 years
31
(23)
8
28
(21)
7
3-4 years
32
(23)
9
29
(21)
8
4-5 years
32
(22)
10
30
(21)
9
After 5 years
906
(393)
513
878
(386)
492
Total
1,063
(508)
555
1,024
(493)
531
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-681": { "value": "
(i) Receivables under finance leases
The Group acts as a lessor of certain finance leases, which have a weighted average duration to maturity of 33 years as at 31 December 2025
( 2024: 34 years). The counterparties, as lessee, are regarded to be the economic owner of the leased assets.
The future minimum lease payments under the arrangement, together with the present value, are disclosed below:
Total future
payments
Unearned
interest\u00a0income
Present value
Total future
payments
Unearned
interest\u00a0income
Present value
2025
2025
2025
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Within 1 year
32
(24)
8
29
(22)
7
1-2 years
30
(23)
7
30
(22)
8
2-3 years
31
(23)
8
28
(21)
7
3-4 years
32
(23)
9
29
(21)
8
4-5 years
32
(22)
10
30
(21)
9
After 5 years
906
(393)
513
878
(386)
492
Total
1,063
(508)
555
1,024
(493)
531
", "dimensions": { "concept": "ifrs-full:DisclosureOfMaturityAnalysisOfFinanceLeasePaymentsReceivableExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-683": { "value": "
16. Cash and cash equivalents
Shareholder
Unit linked
Total
2025
2025
2025
\u00a3m
\u00a3m
\u00a3m
Cash at bank and in hand
1,379
2,458
3,837
Cash equivalents
1,522
11,739
13,261
Total cash and cash equivalents
2,901
14,197
17,098
Shareholder
Unit linked
Total
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
Cash at bank and in hand
1,098
3,502
4,600
Cash equivalents
2,659
9,398
12,057
Total cash and cash equivalents
3,757
12,900
16,657
", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-682": { "value": "
16. Cash and cash equivalents
Shareholder
Unit linked
Total
2025
2025
2025
\u00a3m
\u00a3m
\u00a3m
Cash at bank and in hand
1,379
2,458
3,837
Cash equivalents
1,522
11,739
13,261
Total cash and cash equivalents
2,901
14,197
17,098
Shareholder
Unit linked
Total
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
Cash at bank and in hand
1,098
3,502
4,600
Cash equivalents
2,659
9,398
12,057
Total cash and cash equivalents
3,757
12,900
16,657
", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndBankBalancesAtCentralBanksExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-684": { "value": "
17. Market risk
(i) Investment performance risk
(a) Equity securities
The Group controls its exposure to geographic price risks by using internal country risk exposure limits. These exposure limits are based on
macroeconomic data and key qualitative indicators. The latter take into account economic, social and political environments. The table below
indicates the Group\u2019s exposure to different equity markets around the world. Unit linked equity investments are excluded from the table as
the risk\u00a0is retained by the policyholder.
2025
2024
Exposure to worldwide equity markets
\u00a3m
\u00a3m
United Kingdom
108
75
North America
112
298
Europe
106
187
Japan
8
8
Asia Pacific
6
73
Other
28
37
Listed equities
368
678
Unlisted equities1
676
988
Holdings in unit trusts 2
1,028
1,282
Total equities
2,072
2,948
1. Unlisted equities are split between \u00a3269m (2024: \u00a3444m) United Kingdom, \u00a3355m (2024: \u00a3369m) Europe and \u00a352m (2024: \u00a3175m) North America.
2. Limited Partnerships are included within Holdings in unit trusts.
(b) Debt securities
The Group controls its exposure to geographic price risks by using internal country credit ratings. These ratings are based on macroeconomic
data and key qualitative indicators. The latter take into account economic, social and political environments. The table below indicates the
Group\u2019s\u00a0exposure to different debt security markets around the world. Unit linked debt securities are excluded from the table as the risk
is\u00a0retained\u00a0by the policyholder.
Total
Total
2025
2024
Total debt securities
\u00a3m
\u00a3m
United Kingdom
48,541
40,992
USA
22,500
30,347
Netherlands
2,127
1,934
France
1,282
1,521
Germany
395
413
GIIPS:
Ireland
1,999
1,915
Italy
123
115
Spain
275
214
Belgium
459
280
Rest of Europe
4,020
2,895
Rest of World
5,972
6,494
Collateralised debt obligations1
52
52
Total
87,745
87,172
Retained US portfolio 2
5,817
\u2013
1. All CDOs of \u00a352 m (2024: \u00a352m) are domiciled in the Rest of World.
2. Retained US portfolio (disclosed within Assets of operations classified as held for sale in the Consolidated Balance Sheet) includes the investment portfolio of the US PRT business that
the Group will continue to be exposed to after completion of the sale.
(c) Additional disclosures on shareholder securities exposure
2025
2025
2024
2024
\u00a3m
%
\u00a3m
%
Sovereigns, supras and sub-sovereigns
25,140
29
17,682
20
Banks:
Tier 2 and other subordinated
49
\u2013
75
\u2013
Senior
5,009
6
6,771
8
Covered
156
\u2013
212
\u2013
Financial services:
Tier 2 and other subordinated
227
\u2013
158
\u2013
Senior
2,124
2
2,740
3
Insurance:
Tier 2 and other subordinated
283
\u2013
224
\u2013
Senior
819
1
956
1
Consumer services and goods:
Cyclical
2,325
3
2,642
3
Non-cyclical
5,352
6
6,347
7
Healthcare
2,182
3
2,223
3
Infrastructure:
Social
7,255
8
6,875
8
Economic
5,960
7
6,029
7
Technology and telecoms
2,962
3
4,103
5
Industrials
1,553
2
1,576
2
Utilities
8,942
10
9,288
11
Energy
1,816
2
2,063
2
Commodities
776
1
814
1
Oil and gas
1,237
1
1,497
2
Real estate
4,503
5
4,497
5
Structured finance ABS/RMBS/CMBS/Other
3,267
4
4,487
5
Lifetime mortgage loans
5,756
7
5,861
7
Collateralised debt obligations
52
\u2013
52
\u2013
Total
87,745
100
87,172
100
Retained US portfolio 1
5,817
\u2013
2025
2024
Analysis of Sovereigns, supras and sub-sovereigns
\u00a3m
\u00a3m
Market value by region
United Kingdom
19,425
13,298
USA
3,688
2,528
Netherlands
68
29
France
124
377
Germany
118
123
Ireland
440
426
Rest of Europe
547
324
Rest of World
730
577
Total
25,140
17,682
Retained US portfolio 1
201
\u2013
1. Retained US portfolio (disclosed within Assets of operations classified as held for sale in the Consolidated Balance Sheet) includes the investment portfolio of the US PRT business that
the Group will continue to be exposed to after completion of the sale.
(ii) Currency risk
The Group has minimal exposure to currency risk from financial instruments held by business units in currencies other than their functional
currencies, nearly all such holdings are either backing insurance contracts in the same currency or are hedged back to GBP.
The Group operates internationally and as a result is exposed to foreign currency exchange risk arising from fluctuations in exchange rates of
various currencies. The largest US Dollar currency exposures relate to the Group\u2019s US business, which is classified as a held for sale disposal
group, The majority of currency exposures relating to Euros are held by LGIM Managers (Europe) Limited, a subsidiary of L&G \u2013 Asset
Management Limited. The Group does not hedge foreign currency revenues as these are substantially retained locally to support the growth
of the Group\u2019s business and meet local regulatory and market requirements.
Businesses aim to maintain sufficient assets in local currency to meet local currency liabilities. However, movements may impact the value of
the Group\u2019s consolidated shareholders\u2019 equity which is expressed in Sterling. This aspect of foreign exchange risk is monitored and managed
centrally, against pre-determined limits. These exposures are managed by aligning the deployment of regulatory capital by currency with
he Group\u2019s regulatory capital requirements by currency. Currency borrowings and derivatives may be used to manage exposures within the
limits that have been set. Hedge accounting is currently applied by the Group in order to hedge foreign exchange translation risk on its fixed
rate USD and EUR denominated borrowings through cross-currency swap contracts. Additionally, the Group has hedged the forecast sale
proceeds arising from the disposal of Legal & General America Inc. through forward exchange contracts. Refer to Note 14 for further details.
As at 31 December 2025, the Group held net assets of \u00a33.2bn (2024: net liabilities of \u00a31.5bn) of its total equity attributable to shareholders
in currencies, mainly US Dollar and Euro, other than the functional currency of the relevant business unit. The exchange risks inherent
in\u00a0these exposures may be mitigated through the use of derivatives, mainly forward currency contracts.
Consistent with the Group\u2019s accounting policies, the profits of overseas business units (reported as functional currencies) are translated at
average exchange rates and the net assets (reported as functional currencies) at the closing rate for the reporting period. Information on
the Group\u2019s assets for the current year includes only continuing operations. It therefore excludes contracts associated with the Group\u2019s US
insurance entity, which are classified as assets and liabilities held for sale in the Consolidated Balance Sheet.
A 10% increase (weakening of foreign currencies) or decrease (strengthening of foreign currencies) in these rates would increase or reduce
the profit for the year and net assets as follows:
A 10% increase in
A 10% decrease in
USD:GBP exchange rate
USD:GBP exchange rate
2025
2024
2025
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Profit for the year1
5
(7)
(6)
9
Net assets attributable to USD exposures 1
(158)
(92)
193
111
A 10% increase in
A 10% decrease in
EUR:GBP exchange rate
EUR:GBP exchange rate
2025
2024
2025
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Profit for the year1
\u2013
\u2013
\u2013
\u2013
Net assets attributable to EUR exposures 1
(98)
(17)
120
22
1. Profit for the year impacts relate only to overseas business units where the functional currency is not Sterling. Net asset impacts include both functional currency and non-functional
currency exposures.
A 10% increase or decrease in the USD:GBP rate would impact the profit for the year of operations classified as held for sale by \u00a3(11)m and
\u00a313m respectively and impact net assets by \u00a3(59)m and \u00a372m respectively.
", "dimensions": { "concept": "ifrs-full:SensitivityAnalysisForEachTypeOfMarketRisk", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-685": { "value": "
(b) Debt securities
The Group controls its exposure to geographic price risks by using internal country credit ratings. These ratings are based on macroeconomic
data and key qualitative indicators. The latter take into account economic, social and political environments. The table below indicates the
Group\u2019s\u00a0exposure to different debt security markets around the world. Unit linked debt securities are excluded from the table as the risk
is\u00a0retained\u00a0by the policyholder.
Total
Total
2025
2024
Total debt securities
\u00a3m
\u00a3m
United Kingdom
48,541
40,992
USA
22,500
30,347
Netherlands
2,127
1,934
France
1,282
1,521
Germany
395
413
GIIPS:
Ireland
1,999
1,915
Italy
123
115
Spain
275
214
Belgium
459
280
Rest of Europe
4,020
2,895
Rest of World
5,972
6,494
Collateralised debt obligations1
52
52
Total
87,745
87,172
Retained US portfolio 2
5,817
\u2013
1. All CDOs of \u00a352 m (2024: \u00a352m) are domiciled in the Rest of World.
2. Retained US portfolio (disclosed within Assets of operations classified as held for sale in the Consolidated Balance Sheet) includes the investment portfolio of the US PRT business that
the Group will continue to be exposed to after completion of the sale.
(c) Additional disclosures on shareholder securities exposure
2025
2025
2024
2024
\u00a3m
%
\u00a3m
%
Sovereigns, supras and sub-sovereigns
25,140
29
17,682
20
Banks:
Tier 2 and other subordinated
49
\u2013
75
\u2013
Senior
5,009
6
6,771
8
Covered
156
\u2013
212
\u2013
Financial services:
Tier 2 and other subordinated
227
\u2013
158
\u2013
Senior
2,124
2
2,740
3
Insurance:
Tier 2 and other subordinated
283
\u2013
224
\u2013
Senior
819
1
956
1
Consumer services and goods:
Cyclical
2,325
3
2,642
3
Non-cyclical
5,352
6
6,347
7
Healthcare
2,182
3
2,223
3
Infrastructure:
Social
7,255
8
6,875
8
Economic
5,960
7
6,029
7
Technology and telecoms
2,962
3
4,103
5
Industrials
1,553
2
1,576
2
Utilities
8,942
10
9,288
11
Energy
1,816
2
2,063
2
Commodities
776
1
814
1
Oil and gas
1,237
1
1,497
2
Real estate
4,503
5
4,497
5
Structured finance ABS/RMBS/CMBS/Other
3,267
4
4,487
5
Lifetime mortgage loans
5,756
7
5,861
7
Collateralised debt obligations
52
\u2013
52
\u2013
Total
87,745
100
87,172
100
Retained US portfolio 1
5,817
\u2013
2025
2024
Analysis of Sovereigns, supras and sub-sovereigns
\u00a3m
\u00a3m
Market value by region
United Kingdom
19,425
13,298
USA
3,688
2,528
Netherlands
68
29
France
124
377
Germany
118
123
Ireland
440
426
Rest of Europe
547
324
Rest of World
730
577
Total
25,140
17,682
Retained US portfolio 1
201
\u2013
1. Retained US portfolio (disclosed within Assets of operations classified as held for sale in the Consolidated Balance Sheet) includes the investment portfolio of the US PRT business that
the Group will continue to be exposed to after completion of the sale.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDebtSecuritiesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-686": { "value": "
18. Credit risk
The Group\u2019s exposure to credit risk arises from its offering of insurance and investment products. The investments of shareholders\u2019,
policyholders\u2019\u00a0and segregated clients\u2019 monies require credit risks to be taken, as well as the hedging of insurance (including reinsurance)
and\u00a0other\u00a0financial risks.
Oversight of credit risk management is carried out by the Group Risk Financial Risk Committee (GRFRC) under delegation from the Board.
The GRFRC's remit includes proposing the Group\u2019s appetite for credit risk in aggregate and by issuers, sectors and geography and monitoring
actual exposures relative to appetite. The GRFRC also considers credit risk implicit in new asset classes and corporate transactions and
advises on appropriate counterparty risk tolerances. The Group controls its exposure to counterparty credit risk through defining the
minimum financial strength of the counterparties with which it will deal and setting exposure tolerances for these counterparties, which
are monitored and reviewed by operational management on a counterparty-by-counterparty basis.
The credit profile of the Group\u2019s assets exposed to credit risk is shown below. This includes both externally and internally rated positions.
Unit linked assets have not been included as shareholders are not directly exposed to the associated credit risk. Additionally, assets such
as equity securities, deferred acquisition costs and tax have no exposure to the associated credit risk and therefore have also been excluded.
For externally rated assets, the credit rating bands are provided by independent rating agencies. Unrated traded instruments are assigned
a rating through a portfolio review process or through a committee, depending on complexity. Certain assets require an internal rating even
when an external rating is already available, if these constitute material traded exposures or are complex securitisations or direct investments.
In these cases, internal ratings are assigned by either the Asset Management Direct Investment rating team or the asset management firm
that originated the transaction.
The carrying amount of the financial assets recorded in the financial statements represents the maximum exposure to credit risk before
taking\u00a0account of collateral held. Collateral is held to mitigate credit risk exposures, by virtue of transactions in long-dated derivatives and
stock\u00a0lending activities.
Shareholder
AAA
AA
A
BBB
BB and
below
Other
Total
As at 31 December 2025
Notes
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Government securities
134
20,669
493
185
34
3
21,518
Other fixed rate securities
1,262
7,245
21,606
19,139
310
32
49,594
Variable rate securities
960
2,695
3,402
3,021
99
12
10,189
Lifetime mortgages
\u2013
4,823
458
392
\u2013
83
5,756
Accrued interest
23
166
235
255
3
6
688
Total debt securities
2,379
35,598
26,194
22,992
446
136
87,745
Loans
\u2013
698
44
\u2013
\u2013
522
1,264
Derivative assets
14
\u2013
767
40,686
\u2013
\u2013
172
41,625
Cash and cash equivalents
16
133
594
1,730
165
\u2013
279
2,901
Reinsurance contract assets
499
3,257
4,848
234
\u2013
2
8,840
Other assets
4
38
198
13
1
3,731
3,985
Total
3,015
40,952
73,700
23,404
447
4,842
146,360
Assets of operations classified as held for sale
1,930
2,052
3,789
3,883
188
275
12,117
AAA
AA
A
BBB
BB and
below
Other
Total
As at 31 December 2024
Notes
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Government securities
199
13,741
232
159
18
1
14,350
Other fixed rate securities
1,988
7,690
23,145
21,696
361
42
54,922
Variable rate securities
774
2,703
4,165
3,558
122
16
11,338
Lifetime mortgages
\u2013
4,916
483
402
\u2013
60
5,861
Accrued interest
25
136
256
277
6
1
701
Total debt securities
2,986
29,186
28,281
26,092
507
120
87,172
Loans
\u2013
226
303
\u2013
\u2013
2,185
2,714
Derivative assets
14
\u2013
733
48,298
\u2013
\u2013
164
49,195
Cash and cash equivalents
16
1,420
408
1,628
72
\u2013
229
3,757
Reinsurance contract assets
\u2013
3,889
5,047
228
\u2013
1
9,165
Other assets
12
152
176
29
\u2013
3,783
4,152
Total
4,418
34,594
83,733
26,421
507
6,482
156,155
Impairment
The table below shows the gross carrying value of financial investments measured at FVOCI\u00a0and amortised cost split by credit rating,
separately identifying those investments for which a 12-month ECL (i.e. Stage 1) or Lifetime ECL (i.e. Stage 2 and 3) is calculated, as well
as any loss allowances recognised. As at 31 December 2025, the Group did not have any purchased or originated credit-impaired financial
investments (2024:\u00a0no purchased or originated credit-impaired financial investments).
Assets under
Stage 1
Assets under
Stage 2 and 3
Total
Assets under
Stage 1
Assets under
Stage 2 and 3
Total
FVOCI1
2025
2025
2025
2024
2024
2024
Shareholder
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
AAA
\u2013
\u2013
\u2013
88
\u2013
88
AA
1,857
\u2013
1,857
1,697
\u2013
1,697
A
\u2013
\u2013
\u2013
93
\u2013
93
BBB
\u2013
\u2013
\u2013
43
\u2013
43
BB and below
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Other
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total gross
1,857
\u2013
1,857
1,921
\u2013
1,921
ECL
(8)
\u2013
(8)
(7)
\u2013
(7)
1. \u00a3404m assets of operations classified as held for sale measured under FVOCI with \u00a3nil ECL.
Assets under
Stage 1
Assets under
Stage 2 and 3
Total
Assets under
Stage 1
Assets under
Stage 2 and 3
Total
Amortised cost 1
2025
2025
2025
2024
2024
2024
Shareholder
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
AAA
215
\u2013
215
242
\u2013
242
AA
539
\u2013
539
542
\u2013
542
A
3,534
\u2013
3,534
3,873
\u2013
3,873
BBB
3,717
\u2013
3,717
4,312
\u2013
4,312
BB and below
\u2013
\u2013
\u2013
\u2013
29
29
Other
194
\u2013
194
83
\u2013
83
Total gross
8,199
\u2013
8,199
9,052
29
9,081
ECL
(32)
\u2013
(32)
(32)
\u2013
(32)
Total net amount
8,167
\u2013
8,167
9,020
29
9,049
1. \u00a31,722m assets of operations classified as held for sale measured under amortised cost with \u00a31m ECL.
Other financial assets at amortised cost are predominantly unrated other receivables with an immaterial loss allowance
(2024:\u00a0immaterial\u00a0loss\u00a0allowance).
Offsetting
Financial assets and liabilities are offset in the Consolidated Balance Sheet when the Group has a legally enforceable right to offset and has
the intention to settle the asset and liability on a net basis, or to realise the asset and liability simultaneously.
The Group has not entered into any financial transactions resulting in financial assets and liabilities being offset in the Consolidated Balance
Sheet. The table below shows the financial assets and liabilities that are subject to master netting agreements in shareholder assets and
liabilities. Unit linked assets and liabilities have not been included as shareholders are not exposed to the risks on these policies.
Amounts subject to enforceable netting arrangements
Amounts under master netting arrangements but not offset
Gross and net
amounts reported
in the Consolidated
Balance Sheet
Related financial
instruments 1
Cash collaternal2
Securities
collateral
pledged 2
Net amount
As at 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Derivative assets
41,625
(40,202)
(187)
(1,236)
\u2013
Reverse repurchase agreements
1,060
\u2013
\u2013
(1,060)
\u2013
Total
42,685
(40,202)
(187)
(2,296)
\u2013
Derivative liabilities
(49,451)
40,202
1,477
7,772
\u2013
Repurchase agreement
(1,654)
\u2013
\u2013
1,654
\u2013
Total
(51,105)
40,202
1,477
9,426
\u2013
Amounts subject to enforceable netting arrangements
Amounts under master netting arrangements but not offset
Gross and net
amounts reported
in the Consolidated
Balance Sheet
Related financial
instruments 1
Cash collaternal2
Securities
collateral
pledged2
Net amount
As at 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Derivative assets
49,195
(48,433)
(85)
(677)
\u2013
Reverse repurchase agreements
2,630
\u2013
\u2013
(2,630)
\u2013
Total
51,825
(48,433)
(85)
(3,307)
\u2013
Derivative liabilities
(54,274)
48,433
630
5,211
\u2013
Repurchase agreement
(2,488)
\u2013
\u2013
2,488
\u2013
Total
(56,762)
48,433
630
7,699
\u2013
1. Related financial instruments represents outstanding amounts with the same counterparty which, under agreements such as the ISDA Master Agreement, could be offset and\u00a0settled
net following certain predetermined events.
2. Cash and securities held may exceed target levels due to the complexities of operational collateral management, timing and agreements in place with individual counterparties.
In the tables above, the amounts of assets or liabilities presented in the Consolidated Balance Sheet are offset first by financial instruments that
have the right of offset under master netting or similar arrangements with any remaining amount reduced by cash and securities collateral.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAllowanceForCreditLossesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-687": { "value": "
Impairment
The table below shows the gross carrying value of financial investments measured at FVOCI\u00a0and amortised cost split by credit rating,
separately identifying those investments for which a 12-month ECL (i.e. Stage 1) or Lifetime ECL (i.e. Stage 2 and 3) is calculated, as well
as any loss allowances recognised. As at 31 December 2025, the Group did not have any purchased or originated credit-impaired financial
investments (2024:\u00a0no purchased or originated credit-impaired financial investments).
Assets under
Stage 1
Assets under
Stage 2 and 3
Total
Assets under
Stage 1
Assets under
Stage 2 and 3
Total
FVOCI1
2025
2025
2025
2024
2024
2024
Shareholder
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
AAA
\u2013
\u2013
\u2013
88
\u2013
88
AA
1,857
\u2013
1,857
1,697
\u2013
1,697
A
\u2013
\u2013
\u2013
93
\u2013
93
BBB
\u2013
\u2013
\u2013
43
\u2013
43
BB and below
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Other
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total gross
1,857
\u2013
1,857
1,921
\u2013
1,921
ECL
(8)
\u2013
(8)
(7)
\u2013
(7)
1. \u00a3404m assets of operations classified as held for sale measured under FVOCI with \u00a3nil ECL.
Assets under
Stage 1
Assets under
Stage 2 and 3
Total
Assets under
Stage 1
Assets under
Stage 2 and 3
Total
Amortised cost 1
2025
2025
2025
2024
2024
2024
Shareholder
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
AAA
215
\u2013
215
242
\u2013
242
AA
539
\u2013
539
542
\u2013
542
A
3,534
\u2013
3,534
3,873
\u2013
3,873
BBB
3,717
\u2013
3,717
4,312
\u2013
4,312
BB and below
\u2013
\u2013
\u2013
\u2013
29
29
Other
194
\u2013
194
83
\u2013
83
Total gross
8,199
\u2013
8,199
9,052
29
9,081
ECL
(32)
\u2013
(32)
(32)
\u2013
(32)
Total net amount
8,167
\u2013
8,167
9,020
29
9,049
1. \u00a31,722m assets of operations classified as held for sale measured under amortised cost with \u00a31m ECL.
Other financial assets at amortised cost are predominantly unrated other receivables with an immaterial loss allowance
(2024:\u00a0immaterial\u00a0loss\u00a0allowance).
", "dimensions": { "concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-688": { "value": "
Offsetting
Financial assets and liabilities are offset in the Consolidated Balance Sheet when the Group has a legally enforceable right to offset and has
the intention to settle the asset and liability on a net basis, or to realise the asset and liability simultaneously.
The Group has not entered into any financial transactions resulting in financial assets and liabilities being offset in the Consolidated Balance
Sheet. The table below shows the financial assets and liabilities that are subject to master netting agreements in shareholder assets and
liabilities. Unit linked assets and liabilities have not been included as shareholders are not exposed to the risks on these policies.
Amounts subject to enforceable netting arrangements
Amounts under master netting arrangements but not offset
Gross and net
amounts reported
in the Consolidated
Balance Sheet
Related financial
instruments 1
Cash collaternal2
Securities
collateral
pledged 2
Net amount
As at 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Derivative assets
41,625
(40,202)
(187)
(1,236)
\u2013
Reverse repurchase agreements
1,060
\u2013
\u2013
(1,060)
\u2013
Total
42,685
(40,202)
(187)
(2,296)
\u2013
Derivative liabilities
(49,451)
40,202
1,477
7,772
\u2013
Repurchase agreement
(1,654)
\u2013
\u2013
1,654
\u2013
Total
(51,105)
40,202
1,477
9,426
\u2013
Amounts subject to enforceable netting arrangements
Amounts under master netting arrangements but not offset
Gross and net
amounts reported
in the Consolidated
Balance Sheet
Related financial
instruments 1
Cash collaternal2
Securities
collateral
pledged2
Net amount
As at 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Derivative assets
49,195
(48,433)
(85)
(677)
\u2013
Reverse repurchase agreements
2,630
\u2013
\u2013
(2,630)
\u2013
Total
51,825
(48,433)
(85)
(3,307)
\u2013
Derivative liabilities
(54,274)
48,433
630
5,211
\u2013
Repurchase agreement
(2,488)
\u2013
\u2013
2,488
\u2013
Total
(56,762)
48,433
630
7,699
\u2013
1. Related financial instruments represents outstanding amounts with the same counterparty which, under agreements such as the ISDA Master Agreement, could be offset and\u00a0settled
net following certain predetermined events.
2. Cash and securities held may exceed target levels due to the complexities of operational collateral management, timing and agreements in place with individual counterparties.
In the tables above, the amounts of assets or liabilities presented in the Consolidated Balance Sheet are offset first by financial instruments that
have the right of offset under master netting or similar arrangements with any remaining amount reduced by cash and securities collateral.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOffsettingOfFinancialAssetsAndFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-689": { "value": "
20. Long-term insurance valuation assumptions
The Group\u2019s insurance assumptions, described below, relate to the UK insurance (both annuities and protection) business and material
lines of the\u00a0US insurance (both annuities and protection) business. Other non-UK businesses do not constitute a material component
of the Group\u2019s operations and consideration of geographically determined assumptions is therefore not included.
For the purpose of producing IFRS17 best estimate liabilities, the Group seeks to make best estimate assumptions about future experience
based on current market conditions and recent experience.
(i) Mortality and morbidity
Mortality and morbidity assumptions for the UK business are set with reference to standard tables drawn up by the Continuous Mortality
Investigation Bureau (CMI), a subsidiary of the Institute and Faculty of Actuaries and/or UK death registrations. US assumptions are set with
reference to standard tables drawn up by the American Academy of Actuaries. Tables are based on industry-wide mortality and morbidity
experience for insured lives.
The Group conducts statistical investigations of its mortality and morbidity experience, the majority of which are carried out at least annually.
Investigations determine the extent to which the Group\u2019s experience differs from that underpinning the standard tables and suggest appropriate
adjustments which need to be made to the valuation assumptions. Recent mortality experience observed as a result of Covid-19 and industry
studies on its potential endemic effects have been used to derive appropriate adjustments to the assumptions.
In most cases, mortality rates are set separately for gender and smoker status and the percentage of mortality table will vary for the first 2 to
5 years of the policy\u2019s duration to allow for underwriting selection.
Mortality tables
2025
2024
Non-linked individual assurance business
UK term assurances1
110% TM16/TF16
90% TM08/TF08
UK term assurances with terminal illness 1
75% \u2013 95% TM16/TF16 Sel 5
66% \u2013 86% TM08/TF08 Sel 5
UK term assurances with critical illness 2
91% \u2013 116% ACL16 Sel 2
83% \u2013 126% ACL08 Sel 2
US term assurances 3
Adjusted SOA 2014 VBT
Adjusted SOA 2014 VBT
Whole of Life Protection Plan4
Bespoke Tables based on TM16/TF16,
PMA16_PBO/PFA16_PBO and\u00a0UK\u00a0death
registrations
Bespoke Tables based on TM08/TF08,
PMA16_PBO/PFA16_PBO and\u00a0UK\u00a0death
registrations
Whole of Life over 504
Bespoke Tables based on ELT15 and
Whole\u00a0of\u00a0Life Protection Plan
assumptions
Bespoke Tables based on ELT15 and
Whole\u00a0of\u00a0Life Protection Plan assumptions
Annuity business
UK Annuities in deferment5
67.0% \u2013 94.7% PMA16_PBO/PFA16_PBO
95.3% \u2013 95.5% PMA16_PBO/PFA16_PBO
UK Vested annuities6
Pension risk transfer
94.4% \u2013 94.7% PMA16_PBO/PFA16_PBO
95.3% \u2013 95.5% PMA16_PBO/PFA16_PBO
Other annuities
83.2% \u2013 123.7% PMA16_PBO/
PFA16_PBO
79.0% \u2013 126.1% PMA16_PBO/
PFA16_PBO
US annuities7
RP-2014 Healthy\u00a0Annuitant Total table
RP-2014 Healthy\u00a0Annuitant Total table
1. Improvement assumptions vary by gender, calendar year and year of birth and are set using CMI 2023 mortality improvement projection model, allowing for actual claims experience,
future advancements and post-pandemic excess mortality. (2024: 1.0% p.a. for males and females).
2. Morbidity rates are assumed to deteriorate at a rate of 0.50% p.a. for males and 0.75% p.a. for females (2024: 0.50% p.a. for males and 0.75% p.a. for females). Adjustments are made
for gender, select period, smoker status, policy size, policy duration and year, issue year, age and calendar year.
3. Mortality rates are based upon the Society of Actuaries (\u201cSOA\u201d) 2014 Valuation Basic Table (\u201cVBT\u201d), with scaling to allow for product class, smoker status, gender, issue age, duration,
policy size, issue year, preferred wear off, mortality improvement and calendar year (2024: SOA 2014 VBT).
4. Mortality rates are assumed to reduce based on CMI 2023 model with a long-term annual improvement rate of 1.75% for males and 1.25% for females (2024: CMI 2022 model with a
long-term annual improvement rate of 1.75% for males and 1.25% for females).
5. Table for males is created by using PMA16_PBO and PFA16_PBO for females (2024: PMA16_PBO and PFA16_PBO). These tables are used for both immediate and deferred annuities.
For deferred annuities the percentage of the base table varies by male and female and also by age grouping, blending from a lower percentage at younger ages to a higher percentage
at older ages (2024: percentage of table varies by male and female).
6. Mortality rates are assumed to reduce according to an adjusted version of the mortality improvement model CMI 2023 (2024: CMI 2022) with the following parameters:
Males: Long-term Rate of 1.75% p.a. up to age 85 tapering to 0% at 110 (2024: Long-term Rate of 1.75% p.a. up to age 85 tapering to 0% at 110).
Females: Long-term Rate of 1.25% p.a. up to age 85 tapering to 0% at 110 (2024: Long-term Rate of 1.25% p.a. up to age 85 tapering to 0% at 110).
Smoothing is applied to derive initial rates using a smoothing parameter (Sk) value of 7.5 applied to a data set comprising of ONS population data up to 2019, synthetic data for 2020 -
2022 (created to produce zero improvements over 2020 \u2013 2022) and ONS population data for 2023 with an adjustment to allow for late death registrations. 100% weight is placed on
data for all calendar years. The Direction of Travel parameter is set at 0.25% (2024: not applicable). Initial rates are adjusted by socio-economic class. (2024: smoothing parameter (Sk)
value of 7.5 applied to ONS population data to 2022, with 0% weighting applied to 2020, 2021 and 2022).
For the finalised improvements, an overlay is applied to the CMI 2023 output detailed above by zeroising improvers for 2020, 2021 and 2022.
7. Mortality rates are assumed to reduce according to an adjusted version of the mortality improvement model CMI_2023 (2024: CMI 2022) with the following parameters:
Males: Long-term Rate of 1.5% p.a. up to age 85 tapering to 0% at 110 (2024: 1.5% p.a. up to age 85 tapering to 0% at 110).
Females: Long-term Rate of 1.0% p.a. up to age 85 tapering to 0% at 110 (2024: 1.0% p.a. up to age 85 tapering to 0% at 110).
Smoothing is applied to derive initial rates using a smoothing parameter (Sk) value of 7.75 for males and 7.5 for females, applied to data set comprising of HMD population data up to
2019, synthetic data for 2020 \u2013 2022 (created to produce zero improvements over 2020 \u2013 2022) and HMD population data for 2023. 100% weight is placed on data for all years. The
Direction of Travel parameter is set at 0.15% (2024: not applicable). Initial rates are adjusted by socio-economic class. (2024: smoothing parameter (Sk) value of 7.75 for males and 7.5
for females applied to HMD population data to 2022, with 0% weighting applied to 2020, 2021 and 2022).
For the finalised improvements, an overlay is applied to the CMI_2023 output detailed above by zeroising improvers for 2020, 2021 and 2022.
(ii) Valuation rates of interest and discount rates
The interest rates used to discount the cash flows for the purpose of valuing insurance contract liabilities should reflect the timing and
liquidity characteristics of the insurance liability cash flows and current market conditions. The valuation interest rate assumptions are
derived as interest rate curves with full term structure.
In deriving the liquidity premium assumptions for annuity business, an explicit allowance for risk is deducted from the yield on the assets
backing annuity liabilities. The allowance for risk comprises long-term assumptions about defaults and the market risk premiums for taking
credit risk. In\u00a0the case of lifetime mortgage assets a best estimate expectation of losses arising from the No Negative Equity Guarantee and
the market risk premiums for this risk are deducted from the yield. For the UK annuity business, the deduction for risk of default for corporate
bonds and direct investments equated to 37bps (2024: 38bps). For lifetime mortgages the deductions equated to \u00a30.2bn (2024: \u00a30.3bn).
For US and UK protection business, the yield is calculated based on notional asset portfolios of AA rated corporate bonds and cash, which
reflect the characteristics of the liability cashflows. An explicit allowance is deducted from the yield to reflect the default risk associated with
the notional portfolio assets.
The discount rate curves used for material product lines are shown below. The discount rate curves are used to discount the cashflows on
the underlying contracts and any associated reinsurance cashflows. The graph displays the underlying spot rates:
31 December 2025 Discount Rates
31 December 2024 Discount Rates
(iii) Persistency
The Group monitors its persistency experience and carries out detailed investigations annually. Persistency experience can be volatile and
past experience may not be an appropriate future indicator. The Group tries to balance past experience and potential future conditions in
setting assumptions about expected long-term average persistency levels.
Lapse Rates
2025
2024
UK Level term
1.8% \u2013 28.0%
1.9% \u2013 29.5%
UK Decreasing term
3.7% \u2013 13.9%
3.8% \u2013 14.6%
UK Accelerated critical illness cover
2.9% \u2013 25.8%
3.0% \u2013 28.3%
Whole of Life (conventional non-profit)
0.6% \u2013 13.4%
0.6% \u2013 12.2%
US Term \u2013 10 year guarantee period
7.1% \u2013 8.1%
7.1% \u2013 8.1%
US Term \u2013 15 year guarantee period
4.2% \u2013 5.8%
4.2% \u2013 5.8%
US Term \u2013 20 year guarantee period
3.0% \u2013 6.1%
3.0% \u2013 6.1%
US Term \u2013 30 year guarantee period
2.1% \u2013 6.5%
2.1% \u2013 6.5%
US Universal Life
2.7%
2.7%
(iv) Expenses
The Group monitors its expense experience and carries out detailed investigations regularly to determine the expenses incurred in writing
and administering the different products and classes of business. Adjustments may be made for known future changes in the administration
processes, in line with the Group\u2019s business plan, as well as for changes in allocations. An allowance for expense inflation in the future is
also made in line with RPI, taking account of both salary and price information.
(v) Risk Adjustment
The risk adjustment is the compensation that the Group requires for bearing the uncertainty about the amount and timing of the cash
flows that arises from non-financial risk. For the majority of risks, the Group\u2019s view on the compensation required for non-financial risks is
determined with reference to an 85th percentile confidence level (2024: 85th percentile), calculated using a one-year Value-at-Risk (VaR)
measure. This VaR measure reflects the Group\u2019s view on how non-financial risks behave (risk distributions), diversification of risks across the
Group (risk correlations), and the costs and benefits from reinsurance in place (risk mitigation). This is consistent with how risks are priced for
and managed across the Group. Where the Group has less appetite for a risk (and requires proportionally higher compensation) a higher
confidence level is used. The calculation uses a capital basis appropriate for the territory, the type of business and how it is priced. A one
percentile increase in the one-year confidence level would increase the compensation targeted by c\u00a340m (2024: c\u00a340m).
We have estimated the equivalent confidence level for the entire Group on a multi-year basis, using a weighted average of the key risks
(excluding risks from non-retained US business). Overall the\u00a0Group risk adjustment as at 31 December 2025 is aligned to a 70th percentile
multi-year confidence level (2024: 75th percentile) over the full runoff of the portfolio. The reduction in the Group multi-year disclosure as
at 31 December 2025 is driven by the proportionally higher compensation required by Group on the risks from non-retained US business
compared to the risks on continuing operations and retained US PRT business used to calculate the disclosure.
The Group calculates its Risk Adjustment at contract level using a Provision for Adverse Deviations (PADs) approach, where adjustments
are applied to best estimate non-financial risk assumptions to calculate the risk adjustment required over and above the best estimate
liability for each contract. These adjustments (which vary by risk) are calibrated such that the total Group Risk Adjustment calculated aligns
to the Group\u2019s view of compensation for non-financial risks determined with reference to the 85th percentile (as described above) and the
Risk Adjustment at contract level is representative of the compensation required by the Group for that contract.
", "dimensions": { "concept": "legalandgeneral:DisclosureOfLongTermInsuranceValuationAssumptions", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-690": { "value": "
21. IFRS sensitivity analysis
Impact on post-
tax Group profit
arising from
financial assets
Impact on Group
equity arising from
financial assets
Impact on post-tax
Group profit arising
from insurance
contracts
Impact on Group
equity arising from
insurance contracts
Net impact on
post-tax Group
profit
Net impact on
Group equity
2025
2025
2025
2025
2025
2025
Economic sensitivity
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Long-term insurance business, other Group
assets and obligations
100bps increase in interest rates
(5,506)
(5,756)
5,387
5,545
(119)
(211)
100bps decrease in interest rates
6,450
6,768
(6,374)
(6,577)
76
191
50bps increase in future inflation expectations
1,839
1,887
(1,801)
(1,771)
38
116
50bps decrease in future inflation expectations
(1,681)
(1,723)
1,722
1,697
41
(26)
Credit spreads widen by 100bps with no change
in expected defaults
(3,515)
(3,542)
3,375
3,522
(140)
(20)
25% rise in equity markets
233
233
\u2013
\u2013
233
233
25% fall in equity markets
(233)
(233)
\u2013
\u2013
(233)
(233)
15% rise in property values
882
882
(12)
(12)
870
870
15% fall in property values
(966)
(966)
78
78
(888)
(888)
10bps increase in credit default assumptions
\u2013
\u2013
(399)
(417)
(399)
(417)
10bps decrease in credit default assumptions
\u2013
\u2013
369
383
369
383
Impact on post-tax
Group profit arising
from financial
assets
Impact on Group
equity arising from
financial assets
Impact on post-tax
Group profit arising
from insurance
contracts
Impact on Group
equity arising from
insurance contracts
Net impact on
post-tax Group
profit
Net impact on
Group equity
2024
2024
2024
2024
2024
2024
Economic sensitivity
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Long-term insurance business, other Group
assets and obligations
100bps increase in interest rates
(5,153)
(5,400)
4,975
5,140
(178)
(260)
100bps decrease in interest rates
6,053
6,369
(5,910)
(6,119)
143
250
50bps increase in future inflation expectations
1,630
1,680
(1,540)
(1,508)
90
172
50bps decrease in future inflation expectations
(1,496)
(1,540)
1,499
1,469
3
(71)
Credit spreads widen by 100bps with no change
in expected defaults
(3,449)
(3,475)
3,308
3,459
(141)
(16)
25% rise in equity markets
323
323
\u2013
\u2013
323
323
25% fall in equity markets
(323)
(323)
\u2013
\u2013
(323)
(323)
15% rise in property values
975
975
(19)
(19)
956
956
15% fall in property values
(1,078)
(1,078)
95
95
(983)
(983)
10bps increase in credit default assumptions
\u2013
\u2013
(408)
(426)
(408)
(426)
10bps decrease in credit default assumptions
\u2013
\u2013
373
388
373
388
Impact on CSM
Impact on post-
tax Group profit
Impact on Group
equity
2025
2025
2025
Non-economic sensitivity
\u00a3m
\u00a3m
\u00a3m
Long-term insurance
1% increase in annuitant mortality, gross of reinsurance
392
(75)
(75)
1% increase in annuitant mortality, net of reinsurance
185
(37)
(37)
1% decrease in annuitant mortality, gross of reinsurance
(396)
76
76
1% decrease in annuitant mortality, net of reinsurance
(187)
38
38
5% increase in assurance mortality, gross of reinsurance
(652)
(347)
(267)
5% increase in assurance mortality, net of reinsurance
(352)
(91)
(73)
10% increase in maintenance expenses, gross of reinsurance
(170)
0
6
10% increase in maintenance expenses, net of reinsurance
(168)
(0)
6
Impact on CSM
Impact on post-tax
Group profit
Impact on Group
equity
2024
2024
2024
Non-economic sensitivity
\u00a3m
\u00a3m
\u00a3m
Long-term insurance
1% increase in annuitant mortality, gross of reinsurance
370
(74)
(74)
1% increase in annuitant mortality, net of reinsurance
184
(36)
(36)
1% decrease in annuitant mortality, gross of reinsurance
(374)
75
75
1% decrease in annuitant mortality, net of reinsurance
(185)
37
37
5% increase in assurance mortality, gross of reinsurance
(629)
(400)
(281)
5% increase in assurance mortality, net of reinsurance
(346)
(92)
(65)
10% increase in maintenance expenses, gross of reinsurance
(158)
(7)
0
10% increase in maintenance expenses, net of reinsurance
(155)
(6)
1
The economic sensitivity tables above show the impacts on Group post-tax profit and equity, net of reinsurance, under each sensitivity
scenario, including the impacts arising from assets and liabilities which are part of operations classified as held for sale. The impacts on
Group post-tax profit and equity arising from financial assets and insurance contracts are also shown separately in the tables. The economic
sensitivity impacts cover long-term insurance business and other Group assets and obligations.
The non-economic sensitivity tables above show the impacts on CSM, Group post-tax profit and equity, gross and net of reinsurance, under
each sensitivity scenario. The non-economic sensitivity impacts cover long-term insurance business only.
The Group impacts may arise from asset and/or liability movements under the sensitivities. The current disclosure reflects management\u2019s
view of\u00a0key risks in current economic conditions.
The stresses are assumed to occur on the balance sheet date. Both CSM and current year CSM release into profit are assumed to be affected
when non-financial assumptions are stressed.
In calculating the alternative values, all other assumptions are left unchanged. In practice, impacts of the Group\u2019s experience may be correlated.
The sensitivity analyses do not take into account management actions that could be taken to reduce the impacts. The Group seeks to actively
manage its asset and liability position. A change in market conditions may lead to changes in the asset allocation or charging structure which
may\u00a0have a more, or less, significant impact on the value of the liabilities. The analysis also ignores any second order effects of the
assumption change, including the potential impact on the Group asset and liability position and any second order tax effects.
The sensitivity of profit and equity to changes in assumptions may not be linear. They should not be extrapolated to changes of a much
larger\u00a0order.
The change in interest rate stresses assume a 100 bps increase/decrease in the gross redemption yield on fixed interest securities together
with\u00a0the same change in the real yields on variable securities. Interest rates used to discount liabilities are assumed to move in line with
market yields, adjusted to remove risks in the asset reference portfolios that are not present in the liabilities calculated in a manner
consistent with the base results.
The inflation stresses adopted are a 0.5% per annum (p.a.) increase/decrease in inflation, resulting in a 0.5% p.a. reduction/rise in real
yield and no\u00a0change to the nominal yield. In addition, the expense inflation rate is increased/decreased by 0.5% p.a. The expense inflation
assumptions are\u00a0non-financial and therefore recalibrate the CSM under the stresses. These recalibrations are reflected in the impacts shown.
In the sensitivity for credit spreads, corporate bond yields have increased by 100bps, government bond yields unchanged and there has been
no\u00a0adjustment to the default assumptions. All lifetime mortgages are excluded, as their primary exposure is to property risk and therefore
captured under the property stress.
The equity stresses are a 25% rise and 25% fall in listed equity market values.
The property stresses adopted are a 15% rise and 15% fall in property market values including lifetime mortgages. Where property is being
used to\u00a0back liabilities, interest rates used to discount liabilities move with property yields and so the value of the liabilities will also move.
Some equity and property assets held on the Group balance sheet are subject to factors that increase or decrease their stress relative to
general equity and property levels through a beta factor.
The credit default assumption is set based on the credit rating of individual bonds and Moody\u2019s historical transition matrices. The credit
default stress assumes a +/-10bps stress to the current credit default assumptions, which will have an impact on the interest rates used
to discount liabilities. Default allowances for assets deemed credit risk free are unchanged. All lifetime mortgages are excluded, as their
primary exposure is\u00a0to property risk and therefore captured under the property stress.
The annuitant mortality stresses are a 1% increase and 1% decrease in the mortality rates for immediate and deferred annuitants with
no change to the mortality improvement rates.
The assurance mortality stress is a 5% increase in the mortality and morbidity rates with no change to the mortality and morbidity
improvement\u00a0rates.
The maintenance expense stress is a 10% increase in all types of maintenance expenses in future years.
", "dimensions": { "concept": "legalandgeneral:DisclosureOfIFRSSensitivityAnalysis", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-692": { "value": "
22. Insurance contracts
(i) Insurance service result
Continuing operations
Discontinued operations
Total
Annuities
Protection
Total
Annuities
Protection
Total
Annuities
Protection
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Insurance revenue
Amounts relating to changes in liabilities for remaining
coverage:
CSM recognised for services provided
993
213
1,206
41
112
153
1,034
325
1,359
Expected incurred claims and other insurance
service expenses
5,702
1,689
7,391
690
1,188
1,878
6,392
2,877
9,269
Change in the risk adjustment for non-financial
risk for the risk expired
458
16
474
6
11
17
464
27
491
Recovery of insurance acquisition cash flows
29
92
121
3
62
65
32
154
186
Premium experience variance relating to past and current
service
28
2
30
\u2013
4
4
28
6
34
Total insurance revenue
7,210
2,012
9,222
740
1,377
2,117
7,950
3,389
11,339
Total insurance service expenses
(5,815)
(1,376)
(7,191)
(689)
(1,235)
(1,924)
(6,504)
(2,611)
(9,115)
Allocation of reinsurance premiums
(3,530)
(985)
(4,515)
(61)
(174)
(235)
(3,591)
(1,159)
(4,750)
Amounts recoverable from reinsurers for incurred claims
3,127
571
3,698
57
166
223
3,184
737
3,921
Net expense from reinsurance contracts held
(403)
(414)
(817)
(4)
(8)
(12)
(407)
(422)
(829)
Total insurance service result
992
222
1,214
47
134
181
1,039
356
1,395
Continuing operations
Discontinued operations
Total
Annuities
Protection
Total
Annuities
Protection
Total
Annuities
Protection
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Insurance revenue
Amounts relating to changes in liabilities for remaining
coverage:
CSM recognised for services provided
991
168
1,159
36
102
138
1,027
270
1,297
Expected incurred claims and other insurance
service expenses
5,229
1,614
6,843
609
1,212
1,821
5,838
2,826
8,664
Change in the risk adjustment for non-financial
risk for the risk expired
433
14
447
5
8
13
438
22
460
Recovery of insurance acquisition cash flows
23
87
110
2
55
57
25
142
167
Premium experience variance relating to past and current
service
\u2013
(17)
(17)
\u2013
3
3
\u2013
(14)
(14)
Total insurance revenue
6,676
1,866
8,542
652
1,380
2,032
7,328
3,246
10,574
Total insurance service expenses
(5,269)
(1,966)
(7,235)
(608)
(1,248)
(1,856)
(5,877)
(3,214)
(9,091)
Allocation of reinsurance premiums
(3,156)
(854)
(4,010)
(65)
(183)
(248)
(3,221)
(1,037)
(4,258)
Amounts recoverable from reinsurers for incurred claims
2,751
1,109
3,860
62
177
239
2,813
1,286
4,099
Net (expense)/income from reinsurance contracts held
(405)
255
(150)
(3)
(6)
(9)
(408)
249
(159)
Total insurance service result
1,002
155
1,157
41
126
167
1,043
281
1,324
", "dimensions": { "concept": "ifrs-full:DisclosureOfInsurancePremiumRevenueExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-691": { "value": "
22. Insurance contracts
(i) Insurance service result
Continuing operations
Discontinued operations
Total
Annuities
Protection
Total
Annuities
Protection
Total
Annuities
Protection
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Insurance revenue
Amounts relating to changes in liabilities for remaining
coverage:
CSM recognised for services provided
993
213
1,206
41
112
153
1,034
325
1,359
Expected incurred claims and other insurance
service expenses
5,702
1,689
7,391
690
1,188
1,878
6,392
2,877
9,269
Change in the risk adjustment for non-financial
risk for the risk expired
458
16
474
6
11
17
464
27
491
Recovery of insurance acquisition cash flows
29
92
121
3
62
65
32
154
186
Premium experience variance relating to past and current
service
28
2
30
\u2013
4
4
28
6
34
Total insurance revenue
7,210
2,012
9,222
740
1,377
2,117
7,950
3,389
11,339
Total insurance service expenses
(5,815)
(1,376)
(7,191)
(689)
(1,235)
(1,924)
(6,504)
(2,611)
(9,115)
Allocation of reinsurance premiums
(3,530)
(985)
(4,515)
(61)
(174)
(235)
(3,591)
(1,159)
(4,750)
Amounts recoverable from reinsurers for incurred claims
3,127
571
3,698
57
166
223
3,184
737
3,921
Net expense from reinsurance contracts held
(403)
(414)
(817)
(4)
(8)
(12)
(407)
(422)
(829)
Total insurance service result
992
222
1,214
47
134
181
1,039
356
1,395
Continuing operations
Discontinued operations
Total
Annuities
Protection
Total
Annuities
Protection
Total
Annuities
Protection
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Insurance revenue
Amounts relating to changes in liabilities for remaining
coverage:
CSM recognised for services provided
991
168
1,159
36
102
138
1,027
270
1,297
Expected incurred claims and other insurance
service expenses
5,229
1,614
6,843
609
1,212
1,821
5,838
2,826
8,664
Change in the risk adjustment for non-financial
risk for the risk expired
433
14
447
5
8
13
438
22
460
Recovery of insurance acquisition cash flows
23
87
110
2
55
57
25
142
167
Premium experience variance relating to past and current
service
\u2013
(17)
(17)
\u2013
3
3
\u2013
(14)
(14)
Total insurance revenue
6,676
1,866
8,542
652
1,380
2,032
7,328
3,246
10,574
Total insurance service expenses
(5,269)
(1,966)
(7,235)
(608)
(1,248)
(1,856)
(5,877)
(3,214)
(9,091)
Allocation of reinsurance premiums
(3,156)
(854)
(4,010)
(65)
(183)
(248)
(3,221)
(1,037)
(4,258)
Amounts recoverable from reinsurers for incurred claims
2,751
1,109
3,860
62
177
239
2,813
1,286
4,099
Net (expense)/income from reinsurance contracts held
(405)
255
(150)
(3)
(6)
(9)
(408)
249
(159)
Total insurance service result
1,002
155
1,157
41
126
167
1,043
281
1,324
(ii) Insurance and reinsurance contracts
Information on the Group\u2019s insurance and reinsurance contracts for the current year includes only continuing operations. It therefore excludes
contracts associated with the Group\u2019s US insurance entity, which are classified as assets and liabilities held for sale in the Consolidated
Balance Sheet.
Assets
Liabilities
Assets
Liabilities
2025
2025
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Insurance contracts issued
Annuities
Insurance contract balances
\u2013
91,553
\u2013
91,075
Assets for insurance contract acquisition cash flows 1
\u2013
(15)
\u2013
(14)
Protection
Insurance contract balances
\u2013
2,418
\u2013
4,609
Assets for insurance contract acquisition cash flows 1
\u2013
(10)
\u2013
(22)
Total insurance contracts issued2
\u2013
93,946
\u2013
95,648
Assets
Liabilities
Assets
Liabilities
2025
2025
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Reinsurance contracts held
Annuities
Reinsurance contract balances
6,824
2
6,651
2
Assets for reinsurance contract acquisition cash flows 1
2
(1)
4
\u2013
Protection
Reinsurance contract balances
2,014
1
2,510
168
Assets for reinsurance contract acquisition cash flows 1
\u2013
\u2013
\u2013
\u2013
Total reinsurance contracts held2
8,840
2
9,165
170
1. Assets for insurance and reinsurance acquisition cash flows are presented within the carrying amount of the related insurance and reinsurance contract liabilities.
2. \u00a36,891m (2024: \u00a36,798m) of the net insurance balance of \u00a385,108m (2024: \u00a386,653m) is expected to run off within 12 months.
(iii) Annuities \u2013 Insurance contracts issued
(a) Reconciliation of the liability for remaining coverage and the liability for incurred claims
Liability for remaining
coverage
Liability for remaining
coverage
Excluding
loss
component 1
Loss
component 1
Liability for
incurred
claims 1
Total1
Excluding
loss
component 2
Loss
component 2
Liability for
incurred
claims 2
Total2
2025
2025
2025
2025
2024
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Opening insurance contract liabilities
90,989
1
85
91,075
86,630
3
73
86,706
Opening insurance contract assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Net balance as at 1 January
90,989
1
85
91,075
86,630
3
73
86,706
Transfer to held for sale
(7,856)
\u2013
(18)
(7,874)
\u2013
\u2013
\u2013
\u2013
Insurance revenue
(7,210)
\u2013
\u2013
(7,210)
(7,328)
\u2013
\u2013
(7,328)
Incurred claims and other insurance service
expenses
\u2013
\u2013
5,786
5,786
\u2013
\u2013
5,847
5,847
Amortisation of insurance acquisition expenses
29
\u2013
\u2013
29
25
\u2013
\u2013
25
Changes that relate to past service
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
6
6
Losses and reversal of losses on onerous
contracts
\u2013
\u2013
\u2013
\u2013
\u2013
(1)
\u2013
(1)
Insurance service expenses
29
\u2013
5,786
5,815
25
(1)
5,853
5,877
Insurance service result
(7,181)
\u2013
5,786
(1,395)
(7,303)
(1)
5,853
(1,451)
Finance expenses/(income) from insurance
contracts
3,952
\u2013
\u2013
3,952
(1,196)
\u2013
\u2013
(1,196)
Effect of movements in exchange rates
(30)
\u2013
\u2013
(30)
70
(1)
\u2013
69
Total amount recognised in comprehensive
income
(3,259)
\u2013
5,786
2,527
(8,429)
(2)
5,853
(2,578)
Investment components
(577)
\u2013
577
\u2013
(528)
\u2013
528
\u2013
Cash flows
Premiums received
12,280
\u2013
\u2013
12,280
13,421
\u2013
\u2013
13,421
Claims and other directly attributable expenses
\u2013
\u2013
(6,365)
(6,365)
\u2013
\u2013
(6,369)
(6,369)
Insurance acquisition cash flows
(90)
\u2013
\u2013
(90)
(105)
\u2013
\u2013
(105)
Total cash flows
12,190
\u2013
(6,365)
5,825
13,316
\u2013
(6,369)
6,947
Closing insurance contract liabilities
91,487
1
65
91,553
90,989
1
85
91,075
Closing insurance contract assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Net balance as at 31 December
91,487
1
65
91,553
90,989
1
85
91,075
1. Information on revenue or expenses for the current year is provided for continuing operations only and it therefore excludes any revenue or expenses related to the Group's US insurance
entity, as described in Note 1.
2. For comparative information disclosures purposes, reconciling items between opening and closing balances, as recognised in the Consolidated Income Statement and Consolidated
Statement of Comprehensive Income, have not been re-presented to remove the contribution of discontinued operations. This is because the classification and measurement criteria for
assets and liabilities held for sale are not met in 2024. Refer to Note 1 for further details.
(b) Reconciliation of the measurement components of insurance contracts
Present value
of future cash
flows 1
Risk
adjustment
for non-
financial risk 1
CSM1
Total1
Present value
of future cash
flows 2
Risk
adjustment
for non-
financial risk 2
CSM2
Total2
2025
2025
2025
2025
2024
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Opening insurance contract liabilities
75,495
1,982
13,598
91,075
71,133
2,221
13,352
86,706
Opening insurance contract assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Net balance as at 1 January
75,495
1,982
13,598
91,075
71,133
2,221
13,352
86,706
Transfer to held for sale
(7,334)
(132)
(408)
(7,874)
\u2013
\u2013
\u2013
\u2013
Changes that relate to current service
CSM recognised for services provided
\u2013
\u2013
(993)
(993)
\u2013
\u2013
(1,027)
(1,027)
Release of risk adjustment
\u2013
(458)
\u2013
(458)
\u2013
(438)
\u2013
(438)
Experience adjustments
56
\u2013
\u2013
56
(13)
\u2013
\u2013
(13)
Total changes that relate to current service
56
(458)
(993)
(1,395)
(13)
(438)
(1,027)
(1,478)
Changes that relate to future service
Changes in estimates which adjust the CSM
320
(54)
(266)
\u2013
(202)
(119)
321
\u2013
Changes in estimates that result in losses or
reversal of losses on onerous contracts
\u2013
\u2013
\u2013
\u2013
(1)
\u2013
\u2013
(1)
Contracts initially recognised in the year
(404)
96
308
\u2013
(871)
321
550
\u2013
Total changes that relate to future service
(84)
42
42
\u2013
(1,074)
202
871
(1)
Changes that relate to past service
Claims variance
\u2013
\u2013
\u2013
\u2013
28
\u2013
\u2013
28
Insurance service result
(28)
(416)
(951)
(1,395)
(1,059)
(236)
(156)
(1,451)
Finance expenses/(income) from insurance
contracts
3,191
360
401
3,952
(1,596)
(5)
405
(1,196)
Effect of movements in exchange rates
(28)
(1)
(1)
(30)
70
2
(3)
69
Total amount recognised in comprehensive
income
3,135
(57)
(551)
2,527
(2,585)
(239)
246
(2,578)
Cash flows
Premiums received
12,280
\u2013
\u2013
12,280
13,421
\u2013
\u2013
13,421
Claims and other directly attributable expenses
(6,365)
\u2013
\u2013
(6,365)
(6,369)
\u2013
\u2013
(6,369)
Insurance acquisition cash flows
(90)
\u2013
\u2013
(90)
(105)
\u2013
\u2013
(105)
Total cash flows
5,825
\u2013
\u2013
5,825
6,947
\u2013
\u2013
6,947
Closing insurance contract liabilities
77,121
1,793
12,639
91,553
75,495
1,982
13,598
91,075
Closing insurance contract assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Net balance as at 31 December
77,121
1,793
12,639
91,553
75,495
1,982
13,598
91,075
1. Information on revenue or expenses for the current year is provided for continuing operations only and it therefore excludes any revenue or expenses related to the Group's US insurance
entity, as described in Note 1.
2. For comparative information disclosures purposes, reconciling items between opening and closing balances, as recognised in the Consolidated Income Statement and Consolidated
Statement of Comprehensive Income, have not been re-presented to remove the contribution of discontinued operations. This is because the classification and measurement criteria for
assets and liabilities held for sale are not met in 2024. Refer to Note 1 for further details.
(c) Impact of contracts recognised in the year
Of which relates to:
Of which relates to:
Total impact
of contracts
recognised in
the year 1
Transfers or
business
acquisitions 1
Onerous
contracts
issued 1
Total impact
of\u00a0contracts
recognised in
the year 2
Transfers or
business
acquisitions 2
Onerous
contracts
issued 2
2025
2025
2025
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Insurance acquisition cash flows
91
\u2013
\u2013
105
\u2013
\u2013
Claims and other insurance service expenses payable
11,643
\u2013
\u2013
11,255
\u2013
\u2013
Estimates of present value of cash outflows
11,734
\u2013
\u2013
11,360
\u2013
\u2013
Estimates of present value of cash inflows
(12,138)
\u2013
\u2013
(12,231)
\u2013
\u2013
Risk adjustment for non-financial risk
96
\u2013
\u2013
321
\u2013
\u2013
CSM
308
\u2013
\u2013
550
\u2013
\u2013
Increase in insurance contract liabilities from contracts recognised in
the year
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
1. Information on revenue or expenses for the current year is provided for continuing operations only and it therefore excludes any revenue or expenses related to the Group's US insurance
entity, as described in Note 1.
2. For comparative information disclosures purposes, reconciling items between opening and closing balances, as recognised in the Consolidated Income Statement and Consolidated
Statement of Comprehensive Income, have not been re-presented to remove the contribution of discontinued operations. This is because the classification and measurement criteria for
assets and liabilities held for sale are not met in 2024. Refer to Note 1 for further details.
(d) Amounts determined on transition to IFRS 17
The Group has applied the fair value transition approach to Annuities written prior to 2016, the modified retrospective approach to Annuities
written between 2016 and 2020 and the full retrospective approach for contracts written in 2021. Details of the assumptions applied on
transition were disclosed in the 2023 Annual report and accounts.
New
contracts and
contracts
measured
under the full
retrospective
approach1
Contracts
measured
under the
modified
retrospective
approach 1
Contracts
measured
under the
fair value
approach 1
Total1
New
contracts and
contracts
measured
under the full
retrospective
approach2, 3
Contracts
measured
under the
modified
retrospective
approach 2, 3
Contracts
measured
under the fair
value
approach 2, 3
Total2
2025
2025
2025
2025
2024
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Insurance revenue
2,350
1,979
2,881
7,210
2,258
2,154
2,916
7,328
CSM as at 1 January
3,029
5,680
4,889
13,598
2,441
5,811
5,100
13,352
Transfer to held for sale
(221)
(151)
(36)
(408)
\u2013
\u2013
\u2013
\u2013
Changes that relate to current service
CSM recognised for services provided
(204)
(388)
(401)
(993)
(193)
(418)
(416)
(1,027)
Changes that relate to future service
Changes in estimates which adjust the CSM
(281)
(92)
107
(266)
113
129
79
321
Contracts initially recognised in the year
308
\u2013
\u2013
308
550
\u2013
\u2013
550
Finance expenses/(income) from insurance
contracts
129
156
116
401
118
158
129
405
Effect of movements in exchange rates
(2)
\u2013
1
(1)
\u2013
\u2013
(3)
(3)
CSM as at 31 December
2,758
5,205
4,676
12,639
3,029
5,680
4,889
13,598
1. Information on revenue or expenses for the current year is provided for continuing operations only and it therefore excludes any revenue or expenses related to the Group's US insurance
entity, as described in Note 1.
2. For comparative information disclosures purposes, reconciling items between opening and closing balances, as recognised in the Consolidated Income Statement and Consolidated
Statement of Comprehensive Income, have not been re-presented to remove the contribution of discontinued operations. This is because the classification and measurement criteria for
assets and liabilities held for sale are not met in 2024. Refer to Note 1 for further details.
3. New contracts and contracts measured under the full retrospective approach includes \u00a361m in relation to changes in estimates which adjust the CSM, of which \u00a351m were previously
included within contracts measured under the fair value approach and \u00a310m included within contracts measured under the modified retrospective approach.
(iv) Annuities \u2013 Reinsurance contracts held
(a) Reconciliation of the remaining coverage and incurred claims
Asset for remaining coverage
Asset for remaining coverage
Excluding
loss recovery
component1
Loss
recovery
component 1
Asset for
incurred
claims 1
Total1
Excluding
loss recovery
component2
Loss
recovery
component 2
Asset for
incurred
claims 2
Total2
2025
2025
2025
2025
2024
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Opening insurance contract liabilities
(24)
\u2013
22
(2)
(1)
\u2013
1
\u2013
Opening reinsurance contract assets
6,108
\u2013
543
6,651
4,682
1
75
4,758
Net balance as at 1 January
6,084
\u2013
565
6,649
4,681
1
76
4,758
Transfer to held for sale
(381)
\u2013
(26)
(407)
\u2013
\u2013
\u2013
\u2013
Allocation of reinsurance premium
(3,525)
\u2013
(5)
(3,530)
(3,221)
\u2013
\u2013
(3,221)
Amount recoverable from reinsurers for
incurred claims
Amounts recoverable for claims and other
expenses incurred in the year
\u2013
\u2013
3,127
3,127
24
\u2013
2,790
2,814
Changes that relate to past service
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Changes in expected future recoveries which
relate to\u00a0onerous underlying contracts
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Recovery of reinsurance contract losses \u2013
adjustments to\u00a0loss recovery component for
changes in fulfilment cash\u00a0flows
\u2013
\u2013
\u2013
\u2013
\u2013
(1)
\u2013
(1)
Change in non-performance risk of reinsurers
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Amount recoverable from reinsurers for
incurred claims
\u2013
\u2013
3,127
3,127
24
(1)
2,790
2,813
Net (expenses)/income from reinsurance
contracts
(3,525)
\u2013
3,122
(403)
(3,197)
(1)
2,790
(408)
Finance income/(expenses) from reinsurance
contracts
226
\u2013
\u2013
226
(114)
\u2013
\u2013
(114)
Effect of movements in exchange rates
\u2013
\u2013
\u2013
\u2013
4
\u2013
1
5
Total amount recognised in comprehensive
income
(3,299)
\u2013
3,122
(177)
(3,307)
(1)
2,791
(517)
Investment components
(3)
\u2013
3
\u2013
(4)
\u2013
4
\u2013
Cash flows
Premiums net of commission and other directly
attributable expenses
3,798
\u2013
3
3,801
4,709
\u2013
\u2013
4,709
Recoveries from reinsurance
17
\u2013
(3,071)
(3,054)
\u2013
\u2013
(2,306)
(2,306)
Reinsurance pre-recognition cash flows
10
\u2013
\u2013
10
5
\u2013
\u2013
5
Total cash flows
3,825
\u2013
(3,068)
757
4,714
\u2013
(2,306)
2,408
Closing insurance contract liabilities
(3)
\u2013
1
(2)
(24)
\u2013
22
(2)
Closing reinsurance contract assets
6,229
\u2013
595
6,824
6,108
\u2013
543
6,651
Net balance as at 31 December
6,226
\u2013
596
6,822
6,084
\u2013
565
6,649
1. Information on revenue or expenses for the current year is provided for continuing operations only and it therefore excludes any revenue or expenses related to the Group's US insurance
entity, as described in Note 1.
2. For comparative information disclosures purposes, reconciling items between opening and closing balances, as recognised in the Consolidated Income Statement and Consolidated
Statement of Comprehensive Income, have not been re-presented to remove the contribution of discontinued operations. This is because the classification and measurement criteria for
assets and liabilities held for sale are not met in 2024. Refer to Note 1 for further details.
(b) Reconciliation of the measurement components of reinsurance contract balances
Present
value of
future cash
flows 1
Risk
adjustment
for non-
financial risk 1
CSM1
Total1
Present
value of
future cash
flows2
Risk
adjustment
for non-
financial risk 2
CSM2
Total2
2025
2025
2025
2025
2024
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Opening reinsurance contract liabilities
(11)
8
1
(2)
1
10
(11)
\u2013
Opening reinsurance contract assets
3,290
1,003
2,358
6,651
1,283
1,103
2,372
4,758
Net balance as at 1 January
3,279
1,011
2,359
6,649
1,284
1,113
2,361
4,758
Transfer to held for sale
(395)
(10)
(2)
(407)
\u2013
\u2013
\u2013
\u2013
Changes that relate to current service
CSM recognised for services provided
\u2013
\u2013
(131)
(131)
\u2013
\u2013
(166)
(166)
Change in the risk adjustment for non-financial
risk for risk expired
\u2013
(268)
\u2013
(268)
\u2013
(235)
\u2013
(235)
Experience adjustments
(4)
\u2013
\u2013
(4)
(7)
\u2013
\u2013
(7)
Total changes that relate to current service
(4)
(268)
(131)
(403)
(7)
(235)
(166)
(408)
Changes that relate to future service
Changes in estimates which adjust the CSM
499
35
(534)
\u2013
(68)
(56)
124
\u2013
Changes in estimates that result in losses or
reversal of losses on onerous contracts
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Contracts initially recognised in the year
44
67
(111)
\u2013
(183)
197
(14)
\u2013
Total changes that relate to future service
543
102
(645)
\u2013
(251)
141
110
\u2013
Changes that relate to past service
Claims variance
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Change in non-performance risk of reinsurers
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Net (expenses)/income from reinsurance
contracts
539
(166)
(776)
(403)
(258)
(94)
(56)
(408)
Finance income/(expenses) from reinsurance
contracts
1
167
58
226
(159)
(9)
54
(114)
Effect of movements in exchange rates
\u2013
\u2013
\u2013
\u2013
4
1
\u2013
5
Total amount recognised in comprehensive
income
540
1
(718)
(177)
(413)
(102)
(2)
(517)
Cash flows
Premiums paid net of commission and other
directly attributable expenses
3,801
\u2013
\u2013
3,801
4,709
\u2013
\u2013
4,709
Recoveries from reinsurance
(3,054)
\u2013
\u2013
(3,054)
(2,306)
\u2013
\u2013
(2,306)
Reinsurance pre-recognition cash flows
10
\u2013
\u2013
10
5
\u2013
\u2013
5
Total cash flows
757
\u2013
\u2013
757
2,408
\u2013
\u2013
2,408
Closing reinsurance contract liabilities
(11)
6
3
(2)
(11)
8
1
(2)
Closing reinsurance contract assets
4,192
996
1,636
6,824
3,290
1,003
2,358
6,651
Net balance as at 31 December
4,181
1,002
1,639
6,822
3,279
1,011
2,359
6,649
1. Information on revenue or expenses for the current year is provided for continuing operations only and it therefore excludes any revenue or expenses related to the Group's US insurance
entity, as described in Note 1.
2. For comparative information disclosures purposes, reconciling items between opening and closing balances, as recognised in the Consolidated Income Statement and Consolidated
Statement of Comprehensive Income, have not been re-presented to remove the contribution of discontinued operations. This is because the classification and measurement criteria for
assets and liabilities held for sale are not met in 2024. Refer to Note 1 for further details.
(c) Impact of contracts recognised in the year
Of which relates to:
Of which relates to:
Total impact
of contracts
recognised in
the year 1
Transfers or
business
acquisitions 1
Contracts
initiated with
loss recovery
component 1
Total impact
of\u00a0contracts
recognised in
the year 2
Transfers or
business
acquisitions 2
Contracts
initiated with
loss recovery
component 2
2025
2025
2025
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Estimates of present value of cash outflows
(9,730)
\u2013
\u2013
(6,215)
\u2013
\u2013
Estimates of present value of cash inflows
9,774
\u2013
\u2013
6,032
\u2013
\u2013
Risk adjustment for non-financial risk
67
\u2013
\u2013
197
\u2013
\u2013
CSM
(111)
\u2013
\u2013
(14)
\u2013
\u2013
Net change in reinsurance contracts from contracts recognised in the year
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
1. Information on revenue or expenses for the current year is provided for continuing operations only and it therefore excludes any revenue or expenses related to the Group's US insurance
entity, as described in Note 1.
2. For comparative information disclosures purposes, reconciling items between opening and closing balances, as recognised in the Consolidated Income Statement and Consolidated
Statement of Comprehensive Income, have not been re-presented to remove the contribution of discontinued operations. This is because the classification and measurement criteria for
assets and liabilities held for sale are not met in 2024. Refer to Note 1 for further details.
(d) Amounts determined on transition to IFRS 17
The Group has applied the fair value transition approach to Annuity reinsurance written prior to 2016, the modified retrospective approach to
Annuity reinsurance written between 2016 and 2020 and the full retrospective approach for Annuity reinsurance contracts written in 2021.
Details of the assumptions applied on transition were disclosed in the 2023 Annual report and accounts.
New
contracts and
contracts
measured
under the full
retrospective
approach1
Contracts
measured
under the
modified
retrospective
approach 1
Contracts
measured
under the
fair value
approach 1
Total1
New
contracts and
contracts
measured
under the full
retrospective
approach2
Contracts
measured
under the
modified
retrospective
approach 2
Contracts
measured
under the
fair value
approach 2
Total2
2025
2025
2025
2025
2024
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
CSM as at 1 January
181
1,721
457
2,359
230
1,680
451
2,361
Transfer to held for sale
(8)
6
\u2013
(2)
\u2013
\u2013
\u2013
\u2013
Changes that relate to current service
CSM recognised for services received
\u2013
(97)
(34)
(131)
(13)
(112)
(41)
(166)
Changes that relate to future service
\u2013
\u2013
\u2013
Changes in estimates which adjust the CSM
(220)
(243)
(71)
(534)
(20)
108
36
124
Contracts initially recognised in the year
(111)
\u2013
\u2013
(111)
(14)
\u2013
\u2013
(14)
Finance expenses/(income) from reinsurance
contracts
2
46
10
58
(2)
45
11
54
Effect of movements in exchange rates
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
CSM as at 31 December
(156)
1,433
362
1,639
181
1,721
457
2,359
1. Information on revenue or expenses for the current year is provided for continuing operations only and it therefore excludes any revenue or expenses related to the Group's US insurance
entity, as described in Note 1.
2. For comparative information disclosures purposes, reconciling items between opening and closing balances, as recognised in the Consolidated Income Statement and Consolidated
Statement of Comprehensive Income, have not been re-presented to remove the contribution of discontinued operations. This is because the classification and measurement criteria for
assets and liabilities held for sale are not met in 2024. Refer to Note 1 for further details.
(v) Protection \u2013 Insurance contracts issued
(a) Reconciliation of the liability for remaining coverage and the liability for incurred claims
Liability for remaining
coverage
Liability for remaining
coverage
Excluding
loss
component 1
Loss
component 1
Liability for
incurred
claims 1
Total1
Excluding
loss
component 2
Loss
component 2
Liability for
incurred
claims 2
Total2
2025
2025
2025
2025
2024
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Opening insurance contract liabilities
2,189
1,080
1,340
4,609
2,582
896
1,304
4,782
Opening insurance contract assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Net balance as at 1 January
2,189
1,080
1,340
4,609
2,582
896
1,304
4,782
Transfer to held for sale
(1,736)
(49)
(203)
(1,988)
\u2013
\u2013
\u2013
\u2013
Insurance revenue
(2,012)
\u2013
\u2013
(2,012)
(3,246)
\u2013
\u2013
(3,246)
Incurred claims and other insurance service expenses
\u2013
(55)
1,691
1,636
\u2013
(89)
2,819
2,730
Amortisation of insurance acquisition expenses
92
\u2013
\u2013
92
142
\u2013
\u2013
142
Changes that relate to past service
\u2013
\u2013
46
46
\u2013
\u2013
35
35
Losses and reversal of losses on onerous contracts
\u2013
(398)
\u2013
(398)
\u2013
307
\u2013
307
Insurance service expenses
92
(453)
1,737
1,376
142
218
2,854
3,214
Insurance service result
(1,920)
(453)
1,737
(636)
(3,104)
218
2,854
(32)
Finance expenses/(income) from insurance contracts
162
42
29
233
(278)
(34)
24
(288)
Effect of movements in exchange rates
\u2013
\u2013
\u2013
\u2013
28
\u2013
5
33
Total amount recognised in comprehensive income
(1,758)
(411)
1,766
(403)
(3,354)
184
2,883
(287)
Investment components
\u2013
\u2013
\u2013
\u2013
(38)
\u2013
38
\u2013
Cash flows
Premiums received
2,071
\u2013
\u2013
2,071
3,258
\u2013
\u2013
3,258
Claims and other directly attributable expenses
\u2013
\u2013
(1,734)
(1,734)
\u2013
\u2013
(2,885)
(2,885)
Insurance acquisition cash flows
(137)
\u2013
\u2013
(137)
(259)
\u2013
\u2013
(259)
Total cash flows
1,934
\u2013
(1,734)
200
2,999
\u2013
(2,885)
114
Closing insurance contract liabilities
629
620
1,169
2,418
2,189
1,080
1,340
4,609
Closing insurance contract assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Net balance as at 31 December
629
620
1,169
2,418
2,189
1,080
1,340
4,609
1. Information on revenue or expenses for the current year is provided for continuing operations only and it therefore excludes any revenue or expenses related to the Group's US insurance
entity, as described in Note 1.
2. For comparative information disclosures purposes, reconciling items between opening and closing balances, as recognised in the Consolidated Income Statement and Consolidated
Statement of Comprehensive Income, have not been re-presented to remove the contribution of discontinued operations. This is because the classification and measurement criteria for
assets and liabilities held for sale are not met in 2024. Refer to Note 1 for further details.
(b) Reconciliation of the measurement components of insurance contracts
Present value
of future cash
flows 1
Risk
adjustment
for non-
financial risk 1
CSM1
Total1
Present value
of future cash
flows 2
Risk
adjustment
for non-
financial risk 2
CSM2
Total2
2025
2025
2025
2025
2024
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Opening insurance contract liabilities
2,088
590
1,931
4,609
2,551
600
1,631
4,782
Opening insurance contract assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Net balance as at 1 January
2,088
590
1,931
4,609
2,551
600
1,631
4,782
Transfer to held for sale
(303)
(558)
(1,127)
(1,988)
\u2013
\u2013
\u2013
\u2013
Changes that relate to current service
CSM recognised for services provided
\u2013
\u2013
(213)
(213)
\u2013
\u2013
(270)
(270)
Release of risk adjustment
\u2013
(16)
\u2013
(16)
\u2013
(22)
\u2013
(22)
Experience adjustments
(55)
\u2013
\u2013
(55)
(79)
\u2013
\u2013
(79)
Total changes that relate to current service
(55)
(16)
(213)
(284)
(79)
(22)
(270)
(371)
Changes that relate to future service
Changes in estimates which adjust the CSM
(349)
\u2013
349
\u2013
(174)
6
168
\u2013
Changes in estimates that result in losses or
reversal of losses on onerous contracts
(497)
(1)
\u2013
(498)
213
(2)
\u2013
211
Contracts initially recognised in the year
(59)
15
144
100
(238)
15
319
96
Total changes that relate to future service
(905)
14
493
(398)
(199)
19
487
307
Changes that relate to past service
Claims variance
46
\u2013
\u2013
46
32
\u2013
\u2013
32
Insurance service result
(914)
(2)
280
(636)
(246)
(3)
217
(32)
Finance expenses/(income) from insurance
contracts
198
3
32
233
(334)
(18)
64
(288)
Effect of movements in exchange rates
\u2013
\u2013
\u2013
\u2013
3
11
19
33
Total amount recognised in comprehensive
income
(716)
1
312
(403)
(577)
(10)
300
(287)
Cash flows
Premiums received
2,071
\u2013
\u2013
2,071
3,258
\u2013
\u2013
3,258
Claims and other directly attributable expenses
(1,734)
\u2013
\u2013
(1,734)
(2,885)
\u2013
\u2013
(2,885)
Insurance acquisition cash flows
(137)
\u2013
\u2013
(137)
(259)
\u2013
\u2013
(259)
Total cash flows
200
\u2013
\u2013
200
114
\u2013
\u2013
114
Closing insurance contract liabilities
1,269
33
1,116
2,418
2,088
590
1,931
4,609
Closing insurance contract assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Net balance as at 31 December
1,269
33
1,116
2,418
2,088
590
1,931
4,609
1. Information on revenue or expenses for the current year is provided for continuing operations only and it therefore excludes any revenue or expenses related to the Group's US insurance
entity, as described in Note 1.
2. For comparative information disclosures purposes, reconciling items between opening and closing balances, as recognised in the Consolidated Income Statement and Consolidated
Statement of Comprehensive Income, have not been re-presented to remove the contribution of discontinued operations. This is because the classification and measurement criteria for
assets and liabilities held for sale are not met in 2024. Refer to Note 1 for further details.
(c) Impact of contracts recognised in the year
Of which relates to:
Of which relates to:
Total impact
of contracts
recognised in
the year 1
Transfers or
business
acquisitions 1
Onerous
contracts
issued 1
Total impact
of\u00a0contracts
recognised in
the year 2
Transfers or
business
acquisitions 2
Onerous
contracts
issued 2
2025
2025
2025
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Insurance acquisition cash flows
137
\u2013
97
259
\u2013
94
Claims and other insurance service expenses payable
1,524
\u2013
590
2,382
\u2013
559
Estimates of present value of cash outflows
1,661
\u2013
687
2,641
\u2013
653
Estimates of present value of cash inflows
(1,720)
\u2013
(588)
(2,879)
\u2013
(558)
Risk adjustment for non-financial risk
15
\u2013
1
15
\u2013
1
CSM
144
\u2013
\u2013
319
\u2013
\u2013
Increase in insurance contract liabilities from contracts recognised in the
year
100
\u2013
100
96
\u2013
96
1. Information on revenue or expenses for the current year is provided for continuing operations only and it therefore excludes any revenue or expenses related to the Group's US insurance
entity, as described in Note 1.
2. For comparative information disclosures purposes, reconciling items between opening and closing balances, as recognised in the Consolidated Income Statement and Consolidated
Statement of Comprehensive Income, have not been re-presented to remove the contribution of discontinued operations. This is because the classification and measurement criteria for
assets and liabilities held for sale are not met in 2024. Refer to Note 1 for further details.
(d) Amounts determined on transition to IFRS 17
The Group has applied the following transition approaches to its material Protection insurance contract portfolios on transition to IFRS 17,
by\u00a0year\u00a0of issue:
Transition approach
UK Protection
US Protection
Full retrospective
2021
2021
Modified retrospective
2012-2020
2011-2020
Fair value
Pre-2012
Pre-2011
Details of the assumptions applied on transition were disclosed in the 2023 Annual report and accounts.
New
contracts and
contracts
measured
under the full
retrospective
approach1
Contracts
measured
under the
modified
retrospective
approach 1
Contracts
measured
under the
fair value
approach 1
Total1
New
contracts and
contracts
measured
under the full
retrospective
approach2
Contracts
measured
under the
modified
retrospective
approach 2
Contracts
measured
under the
fair value
approach 2
Total2
2025
2025
2025
2025
2024
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Insurance revenue
1,057
633
322
2,012
1,281
1,189
776
3,246
CSM as at 1 January
906
890
135
1,931
574
866
191
1,631
Transfer to held for sale
(548)
(555)
(24)
(1,127)
\u2013
\u2013
\u2013
\u2013
Changes that relate to current service
CSM recognised for services provided
(121)
(62)
(30)
(213)
(133)
(112)
(25)
(270)
Changes that relate to future service
Changes in estimates which adjust the CSM
156
142
51
349
104
99
(35)
168
Contracts initially recognised in the year
144
\u2013
\u2013
144
319
\u2013
\u2013
319
Finance expenses/(income) from insurance
contracts
20
9
3
32
32
28
4
64
Effect of movements in exchange rates
\u2013
\u2013
\u2013
\u2013
10
9
\u2013
19
CSM as at 31 December
557
424
135
1,116
906
890
135
1,931
1. Information on revenue or expenses for the current year is provided for continuing operations only and it therefore excludes any revenue or expenses related to the Group's US insurance
entity, as described in Note 1.
2. For comparative information disclosures purposes, reconciling items between opening and closing balances, as recognised in the Consolidated Income Statement and Consolidated
Statement of Comprehensive Income, have not been re-presented to remove the contribution of discontinued operations. This is because the classification and measurement criteria for
assets and liabilities held for sale are not met in 2024. Refer to Note 1 for further details.
(vi) Protection \u2013 Reinsurance contracts held
(a) Reconciliation of the remaining coverage and incurred claims
Asset for remaining coverage
Asset for remaining coverage
Excluding
loss recovery
component1
Loss
recovery
component 1
Asset for
incurred
claims 1
Total1
Excluding
loss recovery
component2
Loss
recovery
component 2
Asset for
incurred
claims 2
Total2
2025
2025
2025
2025
2024
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Opening insurance contract liabilities
(305)
\u2013
137
(168)
(299)
\u2013
79
(220)
Opening reinsurance contract assets
748
916
846
2,510
962
760
823
2,545
Net balance as at 1 January
443
916
983
2,342
663
760
902
2,325
Transfer to held for sale
92
(36)
(175)
(119)
\u2013
\u2013
\u2013
\u2013
Allocation of reinsurance premium
(985)
\u2013
\u2013
(985)
(1,037)
\u2013
\u2013
(1,037)
Amount recoverable from reinsurers for
incurred claims
Amounts recoverable for claims and other
expenses incurred in the year
\u2013
(18)
922
904
\u2013
(106)
1,115
1,009
Changes that relate to past service
\u2013
\u2013
51
51
\u2013
\u2013
11
11
Changes in expected future recoveries which
relate to\u00a0onerous underlying contracts
(124)
\u2013
\u2013
(124)
5
\u2013
\u2013
5
Recovery of reinsurance contract losses - Loss
Recovery Component established due to recovery
of losses on underlying contracts
\u2013
155
\u2013
155
\u2013
279
\u2013
279
Recovery of reinsurance contract losses \u2013
adjustments to\u00a0loss recovery component for
changes in fulfilment cash\u00a0flows
\u2013
(415)
\u2013
(415)
\u2013
(18)
\u2013
(18)
Change in non-performance risk of reinsurers
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Amount recoverable from reinsurers for
incurred claims
(124)
(278)
973
571
5
155
1,126
1,286
Net (expenses)/income from reinsurance
contracts
(1,109)
(278)
973
(414)
(1,032)
155
1,126
249
Finance income/(expenses) from reinsurance
contracts
226
\u2013
(7)
219
(123)
\u2013
3
(120)
Effect of movements in exchange rates
\u2013
\u2013
\u2013
\u2013
(1)
1
4
4
Total amount recognised in comprehensive
income
(883)
(278)
966
(195)
(1,156)
156
1,133
133
Investment components
\u2013
\u2013
\u2013
\u2013
(21)
\u2013
21
\u2013
Cash flows
Premiums net of commission and other directly
attributable expenses
966
\u2013
\u2013
966
957
\u2013
\u2013
957
Recoveries from reinsurance
\u2013
\u2013
(981)
(981)
\u2013
\u2013
(1,073)
(1,073)
Total cash flows
966
\u2013
(981)
(15)
957
\u2013
(1,073)
(116)
Closing insurance contract liabilities
(1)
\u2013
\u2013
(1)
(305)
\u2013
137
(168)
Closing reinsurance contract assets
619
602
793
2,014
748
916
846
2,510
Net balance as at 31 December
618
602
793
2,013
443
916
983
2,342
1. Information on revenue or expenses for the current year is provided for continuing operations only and it therefore excludes any revenue or expenses related to the Group's US insurance
entity, as described in Note 1.
2. For comparative information disclosures purposes, reconciling items between opening and closing balances, as recognised in the Consolidated Income Statement and Consolidated
Statement of Comprehensive Income, have not been re-presented to remove the contribution of discontinued operations. This is because the classification and measurement criteria for
assets and liabilities held for sale are not met in 2024. Refer to Note 1 for further details.
(b) Reconciliation of the measurement components of reinsurance contract balances
Present value
of future cash
flows 1
Risk
adjustment
for non-
financial risk 1
CSM1
Total1
Present value
of future cash
flows 2
Risk
adjustment
for non-
financial risk 2
CSM2
Total2
2025
2025
2025
2025
2024
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Opening reinsurance contract liabilities
(191)
4
19
(168)
(254)
4
30
(220)
Opening reinsurance contract assets
2,645
6
(141)
2,510
2,941
6
(402)
2,545
Net balance as at 1 January
2,454
10
(122)
2,342
2,687
10
(372)
2,325
Transfer to held for sale
(8)
(10)
(101)
(119)
\u2013
\u2013
\u2013
\u2013
Changes that relate to current service
CSM recognised for services provided
\u2013
\u2013
(29)
(29)
\u2013
\u2013
6
6
Change in the risk adjustment for non-financial
risk for risk expired
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Experience adjustments
(52)
\u2013
\u2013
(52)
(30)
\u2013
\u2013
(30)
Total changes that relate to current service
(52)
\u2013
(29)
(81)
(30)
\u2013
6
(24)
Changes that relate to future service
Changes in estimates which adjust the CSM
(310)
\u2013
310
\u2013
(208)
\u2013
208
\u2013
Changes in estimates that result in losses or
reversal of losses on onerous contracts
(475)
\u2013
(8)
(483)
170
\u2013
\u2013
170
Contracts initially recognised in the year
73
\u2013
27
100
52
\u2013
43
95
Total changes that relate to future service
(712)
\u2013
329
(383)
14
\u2013
251
265
Changes that relate to past service
Claims variance
50
\u2013
\u2013
50
8
\u2013
\u2013
8
Change in non-performance risk of reinsurers
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Net (expenses)/income from reinsurance
contracts
(714)
\u2013
300
(414)
(8)
\u2013
257
249
Finance income/(expenses) from reinsurance
contracts
221
\u2013
(2)
219
(113)
\u2013
(7)
(120)
Effect of movements in exchange rates
\u2013
\u2013
\u2013
\u2013
4
\u2013
\u2013
4
Total amount recognised in comprehensive
income
(493)
\u2013
298
(195)
(117)
\u2013
250
133
Cash flows
Premiums paid net of commission and other
directly attributable expenses
966
\u2013
\u2013
966
957
\u2013
\u2013
957
Recoveries from reinsurance
(981)
\u2013
\u2013
(981)
(1,073)
\u2013
\u2013
(1,073)
Reinsurance pre-recognition cash flows
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total cash flows
(15)
\u2013
\u2013
(15)
(116)
\u2013
\u2013
(116)
Closing reinsurance contract liabilities
(1)
\u2013
\u2013
(1)
(191)
4
19
(168)
Closing reinsurance contract assets
1,939
\u2013
75
2,014
2,645
6
(141)
2,510
Net balance as at 31 December
1,938
\u2013
75
2,013
2,454
10
(122)
2,342
1. Information on revenue or expenses for the current year is provided for continuing operations only and it therefore excludes any revenue or expenses related to the Group's US insurance
entity, as described in Note 1.
2. For comparative information disclosures purposes, reconciling items between opening and closing balances, as recognised in the Consolidated Income Statement and Consolidated
Statement of Comprehensive Income, have not been re-presented to remove the contribution of discontinued operations. This is because the classification and measurement criteria for
assets and liabilities held for sale are not met in 2024. Refer to Note 1 for further details.
(c) Impact of contracts recognised in the year
Of which relates to:
Of which relates to:
Total impact
of contracts
recognised in
the year 1
Transfers or
business
acquisitions 1
Contracts
initiated with
loss recovery
component 1
Total impact
of\u00a0contracts
recognised in
the year 2
Transfers or
business
acquisitions 2
Contracts
initiated with
loss recovery
component 2
2025
2025
2025
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Estimates of present value of cash outflows
(569)
\u2013
(580)
(587)
\u2013
(522)
Estimates of present value of cash inflows
642
\u2013
651
639
\u2013
590
Risk adjustment for non-financial risk
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
CSM
27
\u2013
29
43
\u2013
27
Net change in reinsurance contracts from contracts recognised in the year
100
\u2013
100
95
\u2013
95
1. Information on revenue or expenses for the current year is provided for continuing operations only and it therefore excludes any revenue or expenses related to the Group's US insurance
entity, as described in Note 1.
2. For comparative information disclosures purposes, reconciling items between opening and closing balances, as recognised in the Consolidated Income Statement and Consolidated
Statement of Comprehensive Income, have not been re-presented to remove the contribution of discontinued operations. This is because the classification and measurement criteria for
assets and liabilities held for sale are not met in 2024. Refer to Note 1 for further details.
(d) Amounts determined on transition to IFRS 17
The Group has applied the following transition approaches to its material Protection reinsurance contract portfolios on transition to IFRS 17,
by\u00a0year of issue:
Transition approach
UK Protection
US Protection
Full retrospective
2021
2021
Modified retrospective
2012-2020
2011-2020
Fair value
Pre-2012
Pre-2011
Details of the assumptions applied on transition were disclosed in the 2023 Annual report and accounts.
New
contracts and
contracts
measured
under the full
retrospective
approach1
Contracts
measured
under the
modified
retrospective
approach 1
Contracts
measured
under the
fair value
approach 1
Total1
New
contracts and
contracts
measured
under the full
retrospective
approach2
Contracts
measured
under the
modified
retrospective
approach 2
Contracts
measured
under the
fair value
approach 2
Total2
2025
2025
2025
2025
2024
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
CSM as at 1 January
150
(318)
46
(122)
16
(465)
77
(372)
Transfer to held for sale
(58)
(57)
14
(101)
\u2013
\u2013
\u2013
\u2013
Changes that relate to current service
CSM recognised for services received
(23)
12
(18)
(29)
(18)
33
(9)
6
Changes that relate to future service
\u2013
\u2013
\u2013
Changes in estimates which adjust the CSM
51
213
46
310
109
123
(24)
208
Changes in estimates that result in losses or
reversal of losses on onerous contracts
(3)
(5)
\u2013
(8)
\u2013
\u2013
\u2013
\u2013
Contracts initially recognised in the year
27
\u2013
\u2013
27
43
\u2013
\u2013
43
Finance expenses/(income) from reinsurance
contracts
5
(8)
1
(2)
1
(10)
2
(7)
Effect of movements in exchange rates
\u2013
\u2013
\u2013
\u2013
(1)
1
\u2013
\u2013
CSM as at 31 December
149
(163)
89
75
150
(318)
46
(122)
1. Information on revenue or expenses for the current year is provided for continuing operations only and it therefore excludes any revenue or expenses related to the Group's US insurance
entity as described in Note 1.
2. For comparative information disclosures purposes, reconciling items between opening and closing balances, as recognised in the Consolidated Income Statement and Consolidated
Statement of Comprehensive Income, have not been re-presented to remove the contribution of discontinued operations. This is because the classification and measurement criteria for
assets and liabilities held for sale are not met in 2024. Refer to Note 1 for further details.
(vii) Maturity of contractual undiscounted cash flows
Insurance contracts issued 1
Reinsurance contracts issued 1
Annuities
Protection
Total
Annuities
Protection
Total
As at 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Contractual undiscounted cash flows
1 year or less
6,835
295
7,130
(312)
(542)
(854)
1 - 2 years
6,777
(157)
6,620
(244)
(40)
(284)
2 - 3 years
6,689
(176)
6,513
(246)
(49)
(295)
3 - 4 years
6,612
(132)
6,480
(249)
(49)
(298)
4 - 5 years
6,517
(78)
6,439
(252)
(57)
(309)
5 - 10 years
30,637
180
30,817
(1,308)
(428)
(1,736)
10 - 20 years
48,042
1,705
49,747
(2,750)
(1,250)
(4,000)
Over 20 years
46,179
2,664
48,843
(6,267)
(1,685)
(7,952)
Total
158,288
4,301
162,589
(11,628)
(4,100)
(15,728)
Insurance contracts issued
Reinsurance contracts issued
Annuities
Protection
Total
Annuities
Protection
Total
As at 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Contractual undiscounted cash flows
1 year or less
6,263
236
6,499
91
(576)
(485)
1 - 2 years
6,693
(385)
6,308
(243)
(60)
(303)
2 - 3 years
6,597
(335)
6,262
(226)
(71)
(297)
3 - 4 years
6,503
(246)
6,257
(268)
(75)
(343)
4 - 5 years
6,407
(154)
6,253
(256)
(83)
(339)
5 - 10 years
29,925
380
30,305
(1,134)
(621)
(1,755)
10 - 20 years
46,008
3,396
49,404
(1,990)
(1,687)
(3,677)
Over 20 years
41,527
4,319
45,846
(5,651)
(1,995)
(7,646)
Total
149,923
7,211
157,134
(9,677)
(5,168)
(14,845)
1. Information on revenue or expenses for the current year is provided for continuing operations only and it therefore excludes any revenue or expenses related to the Group's US insurance
entity, as described in Note 1.
The undiscounted cash flows are calculated in line with the methodology and assumptions used to the determine the best estimate liabilities.
Where portfolios contain amounts which would be payable on demand the cashflows are determined in line with the best estimates of
policyholder behaviour. Products which have amounts considered payable on demand are deferred annuities in the UK and universal life
in the US.
During the deferral period a policyholder often has the ability to elect to surrender the policy or retire early, at which time the deferred
annuity policy terminates. The cash value of the surrender is calculated in line with the terms of the agreement and in reference to the
duration of deferral. The total value considered payable on demand as at 31 December 2025 is \u00a312,789m (2024: \u00a310,990m).
(viii) CSM maturity profile
Insurance contracts issued 1
Reinsurance contracts issued 1
Annuities
Protection
Total
Annuities
Protection
Total
As at 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Number of years until expected to be recognised
1 year or less
618
137
755
(83)
(22)
(105)
1 - 2 years
613
105
718
(82)
(17)
(99)
2 - 3 years
602
90
692
(81)
(14)
(95)
3 - 4 years
588
80
668
(80)
(11)
(91)
4 - 5 years
571
72
643
(79)
(8)
(87)
5 - 10 years
2,589
265
2,854
(377)
(13)
(390)
10 - 20 years
3,833
256
4,089
(569)
8
(561)
Over 20 years
3,225
111
3,336
(288)
2
(286)
Total
12,639
1,116
13,755
(1,639)
(75)
(1,714)
Insurance contracts issued
Reinsurance contracts issued
Annuities
Protection
Total
Annuities
Protection
Total
As at 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Number of years until expected to be recognised
1 year or less
618
184
802
(102)
\u2013
(102)
1 - 2 years
633
150
783
(106)
1
(105)
2 - 3 years
629
132
761
(105)
2
(103)
3 - 4 years
619
122
741
(105)
3
(102)
4 - 5 years
605
115
720
(104)
4
(100)
5 - 10 years
2,764
481
3,245
(501)
31
(470)
10 - 20 years
4,169
549
4,718
(806)
61
(745)
Over 20 years
3,561
198
3,759
(530)
20
(510)
Total
13,598
1,931
15,529
(2,359)
122
(2,237)
1. Information on revenue or expenses for the current year is provided for continuing operations only and it therefore excludes any revenue or expenses related to the Group's US insurance
entity as described in Note 1.
The amounts presented above reflect the net amount of CSM amortisation and interest accretion expected to be recognised in Insurance
service\u00a0result in future periods. Actual CSM amortisation in future periods will differ from that presented due to the impacts of future
new\u00a0business, recalibrations of the CSM, changes in the future coverage units as well as interest accretion, which will be presented
in\u00a0Finance\u00a0income and expense.
(ix) Assets for insurance acquisition cash flows
(a) Insurance contracts
Annuities1
Protection1
Total1
Annuities2
Protection2
Total2
2025
2025
2025
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Opening balance
14
22
36
18
24
42
Transfer to held for sale
\u2013
(15)
(15)
\u2013
\u2013
\u2013
Amounts incurred during the year
91
140
231
101
257
358
Amounts derecognised and included in the measurement of insurance
contracts
(90)
(137)
(227)
(105)
(259)
(364)
Closing balance
15
10
25
14
22
36
Presented in insurance contract assets
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Presented in insurance contract liabilities
15
10
25
14
22
36
Total3
15
10
25
14
22
36
1. Information on revenue or expenses for the current year is provided for continuing operations only and it therefore excludes any revenue or expenses related to the Group's US insurance
entity as described in Note 1.
2. For comparative information disclosures purposes, reconciling items between opening and closing balances, as recognised in the Consolidated Income Statement and Consolidated
Statement of Comprehensive Income, have not been re-presented to remove the contribution of discontinued operations. This is because the classification and measurement criteria for
assets and liabilities held for sale are not met in 2024. Refer to Note 1 for further details.
3. All balances relating to assets for insurance acquisition cash flows are expected to run off within a year.
(b) Reinsurance contracts
Annuities1
Protection1
Total1
Annuities2
Protection2
Total2
2025
2025
2025
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Opening balance
4
\u2013
4
3
\u2013
3
Amounts incurred during the year
9
\u2013
9
7
\u2013
7
Amounts derecognised and included in the measurement of reinsurance
contracts
(10)
\u2013
(10)
(6)
\u2013
(6)
Closing balance
3
\u2013
3
4
\u2013
4
Presented in insurance contract assets
2
\u2013
2
4
\u2013
4
Presented in insurance contract liabilities
1
\u2013
1
\u2013
\u2013
\u2013
Total3
3
\u2013
3
4
\u2013
4
1. Information on revenue or expenses for the current year is provided for continuing operations only and it therefore excludes any revenue or expenses related to the Group's US insurance
entity as described in Note 1.
2. For comparative information disclosures purposes, reconciling items between opening and closing balances, as recognised in the Consolidated Income Statement and Consolidated
Statement of Comprehensive Income, have not been re-presented to remove the contribution of discontinued operations. This is because the classification and measurement criteria for
assets and liabilities held for sale are not met in 2024. Refer to Note 1 for further details.
3. All balances relating to assets for insurance acquisition cash flows are expected to run off within a year.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInsuranceContractsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-693": { "value": "
(b) Reinsurance contracts
Annuities1
Protection1
Total1
Annuities2
Protection2
Total2
2025
2025
2025
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Opening balance
4
\u2013
4
3
\u2013
3
Amounts incurred during the year
9
\u2013
9
7
\u2013
7
Amounts derecognised and included in the measurement of reinsurance
contracts
(10)
\u2013
(10)
(6)
\u2013
(6)
Closing balance
3
\u2013
3
4
\u2013
4
Presented in insurance contract assets
2
\u2013
2
4
\u2013
4
Presented in insurance contract liabilities
1
\u2013
1
\u2013
\u2013
\u2013
Total3
3
\u2013
3
4
\u2013
4
1. Information on revenue or expenses for the current year is provided for continuing operations only and it therefore excludes any revenue or expenses related to the Group's US insurance
entity as described in Note 1.
2. For comparative information disclosures purposes, reconciling items between opening and closing balances, as recognised in the Consolidated Income Statement and Consolidated
Statement of Comprehensive Income, have not been re-presented to remove the contribution of discontinued operations. This is because the classification and measurement criteria for
assets and liabilities held for sale are not met in 2024. Refer to Note 1 for further details.
3. All balances relating to assets for insurance acquisition cash flows are expected to run off within a year.
", "dimensions": { "concept": "ifrs-full:DisclosureOfReinsuranceExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-694": { "value": "
23. Investment contract liabilities
(i) Analysis of investment contract liabilities
Gross
Gross
2025
2024
\u00a3m
\u00a3m
Investment contract liabilities
357,955
323,957
Expected to be settled within 12 months
32,968
30,517
Expected to be settled after 12 months
324,987
293,440
Amounts under unit linked contracts are generally repayable on demand and the Group is responsible for ensuring there is sufficient liquidity
within the asset portfolio to enable liabilities to unit linked policyholders to be met as they fall due. However, the terms of funds investing in
less liquid assets permit the deferral of redemptions for predefined periods in circumstances where there are not sufficient liquid assets
within the fund to meet the level of requested redemptions.
Investment contract liabilities include \u00a31,129m (2024: \u00a31,093m) of Assured Payment Policies (APP) and Fixed Term Annuity (FTA) products,
which are classified as Level 2 in the fair value hierarchy. The valuation of APP and FTA products are determined through a discounted cash
flows model, where the discount rate is derived from a risk-free rate, a credit benchmark spread and a zero-volatility spread (Z-spread). The
credit benchmark rate used is the A-rated credit spread curve which reflects the strategic portfolio mix. The Z-spread ensures that the fair
value at inception is equal to the transaction price, therefore it is based on the premium on origination and remains constant over the life of
the policy.
The presented fair values of the remaining investment contract liabilities reflect quoted prices in active markets and they have been classified
as\u00a0Level 1 in the fair value hierarchy.
During the year, there have been no transfers of investment contract liabilities between levels of the fair value hierarchy (2024: no transfers
between levels of the fair value hierarchy).
(ii) Movement in investment contract liabilities
Gross
Gross
2025
2024
\u00a3m
\u00a3m
As at 1 January
323,957
316,872
Transfer to held for sale
(115)
\u2013
Reserves in respect of new business
44,390
44,162
Amounts paid on surrenders and maturities during the year
(49,241)
(58,957)
Investment return
39,327
22,196
Management charges
(363)
(316)
Total as at 31 December
357,955
323,957
", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentContractsLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-698": { "value": "
24. Borrowings
Borrowings comprise core borrowings such as subordinated Tier 2 bond issuance, long-term unsecured senior debt and operational
borrowings such as commercial paper issuance and bank borrowings under both committed and uncommitted debt facilities, including
bank overdrafts. Borrowings secured on specific assets/cash flows are included as non-recourse borrowings.
(i) Analysis by type
Borrowings
excluding
unit linked
borrowings
Unit linked
borrowings
Total
Borrowings
excluding
unit linked
borrowings
Unit linked
borrowings
Total
2025
2025
2025
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Core borrowings
4,297
\u2013
4,297
4,308
\u2013
4,308
Operational borrowings
292
309
601
1,734
1,657
3,391
Total borrowings
4,589
309
4,898
6,042
1,657
7,699
\u00a3229m of interest expense was incurred during the year (2024: \u00a3216m) on borrowings excluding non-recourse and unit linked borrowings.
The\u00a0total finance costs incurred in the year were \u00a3282m (2024: \u00a3273m), which also includes \u00a3 6m of finance costs on lease liabilities
(2024: \u00a37m). Finance costs of \u00a35m ( 2024: \u00a33m) were capitalised in the year.
(ii) Analysis by nature
(a) Core borrowings
Carrying
amount
Coupon rate
Fair value
Carrying
amount
Coupon rate
Fair value
2025
2025
2025
2024
2024
2024
\u00a3m
%
\u00a3m
\u00a3m
%
\u00a3m
Subordinated borrowings
5.5% Sterling subordinated notes 2064 (Tier 2)
13
5.50
13
590
5.50
565
5.375% Sterling subordinated notes 2045 (Tier 2)
\u2013
\u2013
\u2013
605
5.38
606
5.25% US Dollar subordinated notes 2047 (Tier 2)
640
5.25
644
688
5.25
684
5.55% US Dollar subordinated notes 2052 (Tier 2)
374
5.55
382
403
5.55
408
5.125% Sterling subordinated notes 2048 (Tier 2)
401
5.13
407
401
5.13
398
3.75% Sterling subordinated notes 2049 (Tier 2)
600
3.75
578
600
3.75
555
4.5% Sterling subordinated notes 2050 (Tier 2)
501
4.50
492
501
4.50
473
6.625% Sterling subordinated notes 2055 (Tier 2)
602
6.63
642
\u2013
\u2013
\u2013
4.375% Euro subordinated notes 2055 (Tier 2)
613
4.38
627
\u2013
\u2013
\u2013
Client fund holdings of Group debt (Tier 2)1
(47)
\u2013
(46)
(77)
\u2013
(73)
Total subordinated borrowings
3,697
\u2013
3,739
3,711
\u2013
3,616
Senior borrowings
Sterling medium term notes 2031-2041
609
5.87
645
609
5.87
633
Client fund holdings of Group debt 1
(9)
\u2013
(9)
(12)
\u2013
(12)
Total senior borrowings
600
\u2013
636
597
\u2013
621
Total core borrowings
4,297
\u2013
4,375
4,308
\u2013
4,237
1. \u00a356m (31 December 2024: \u00a389m) of the Group\u2019s subordinated and senior borrowings are held by L&G customers through unit linked products. These borrowings are shown
as\u00a0a\u00a0deduction from total core borrowings in the table above.
The presented fair values of the Group\u2019s core borrowings primarily reflect quoted prices in active markets and they have been classified
as Level 1 in the fair value hierarchy. The 5.55% US Dollar subordinated notes 2052 and \u00a350m (31 December 2024: \u00a349m) of the senior
borrowings are derived using prices from an external, publicly available pricing model by a standard market pricing source and have been
classified as Level 2 in the fair value hierarchy. The inputs for this model include a range of factors which are deemed to be observable,
including current market prices for comparative instruments, period to maturity and yield curves.
Subordinated borrowings
5.5% Sterling subordinated notes 2064
On 9 September 2025, Legal & General Group Plc completed a tender offer and redeemed \u00a3587m of these notes. On 2 February 2026,
Legal & General Group Plc redeemed the remaining \u00a313m of these notes following the capital disqualification event on 1 January 2026.
5.375% Sterling subordinated notes 2045
On 3 April 2025, Legal & General Group Plc completed a tender offer and redeemed \u00a3498m of these notes. On 27 October 2025,
Legal & General Group Plc redeemed the remaining \u00a3102m of these notes at their first call date.
5.25% US Dollar subordinated notes 2047
On 21 March 2017, Legal & General Group Plc issued $850m of 5.25% dated subordinated notes. The notes are callable at par on
21 March 2027 and every five years thereafter. If not called, the coupon from 21 March 2027 will be reset to the prevailing US Dollar
mid-swap rate plus 3.687% p.a. These notes mature on 21 March 2047.
5.55% US Dollar subordinated notes 2052
On 24 April 2017, Legal & General Group Plc issued $500m of 5.55% dated subordinated notes. The notes are callable at par on
24 April 2032 and every five years thereafter. If not called, the coupon from 24 April 2032 will be reset to the prevailing US Dollar
mid-swap rate plus 4.19% p.a. These notes mature on 24 April 2052.
5.125% Sterling subordinated notes 2048
On 14 November 2018, Legal & General Group Plc issued \u00a3400m of 5.125% dated subordinated notes. The notes are callable at par on
14 November 2028 and every five years thereafter. If not called, the coupon from 14 November 2028 will be reset to the prevailing five
year benchmark gilt yield plus 4.65% p.a. These notes mature on 14 November 2048.
3.75% Sterling subordinated notes 2049
On 26 November 2019, Legal & General Group Plc issued \u00a3600m of 3.75% dated subordinated notes. The notes are callable at par
on 26 November 2029 and every five years thereafter. If not called, the coupon from 26 November 2029 will be reset to the prevailing
five year benchmark gilt yield plus 4.05% p.a. These notes mature on 26 November 2049.
4.5% Sterling subordinated notes 2050
On 1 May 2020, Legal & General Group Plc issued \u00a3500m of 4.5% dated subordinated notes. The notes are callable at par on
1 November 2030 and every five years thereafter. If not called, the coupon from 1 November 2030 will be reset to the prevailing
five year benchmark gilt yield plus 5.25% p.a. These notes mature on 1 November 2050.
6.625% Sterling subordinated notes 2055
On 1 April 2025, Legal & General Group Plc issued \u00a3600m of 6.625% dated subordinated notes. The notes are callable at par from
1 October 2034 until 1 April 2035 and on each interest payment date thereafter. If not called, the coupon from 1 April 2035 will be
reset to the prevailing five year benchmark gilt yield plus 3% p.a. These notes mature on 1 April 2055.
4.375% Euro subordinated notes 2055
On 4 September 2025, Legal & General Group Plc issued \u20ac700m of 4.375% dated subordinated notes. The notes are callable at par from
4 March 2035 until 4 September 2035 and on each interest payment date thereafter. If not called, the coupon from 4 September 2035 will
be reset to the prevailing three month Euribor plus 2.8% with further resets every three months thereafter. These notes mature
on 4 September 2055.
All of the above subordinated notes are treated as Tier 2 Own Funds for Solvency II purposes unless stated otherwise.
Senior borrowings
Between 2000 and 2002 Legal & General Finance Plc issued \u00a3600m of senior unsecured Sterling medium term notes 2031-2041 at
coupons between 5.75% and 5.875%. These notes have various maturity dates between 2031 and 2041.
(b) Operational borrowings
Carrying
amount
Interest rate
Fair value
Carrying
amount
Interest rate
Fair value
2025
2025
2025
2024
2024
2024
\u00a3m
%
\u00a3m
\u00a3m
%
\u00a3m
Short-term operational borrowings
Euro Commercial Paper
50
4.42
50
50
5.26
50
Bank loans and overdrafts
14
\u2013
14
9
\u2013
9
Non-recourse borrowings
Class B Surplus Notes
\u2013
\u2013
\u2013
1,411
7.66
1,411
Affordable Homes revolving credit facilities
120
5.40
120
185
6.06
185
Homes Modular revolving credit facility
\u2013
\u2013
\u2013
11
8.02
11
Suburban Build to Rent revolving credit facility
108
6.40
108
68
7.13
68
Total operational borrowings 1
292
\u2013
292
1,734
\u2013
1,734
1. Unit linked borrowings with a carrying value of \u00a3309m (31 December 2024: \u00a31,657m) are excluded from the analysis above as the risk is retained by policyholders. Operational
borrowings including unit linked borrowings are \u00a3601m (31 December 2024: \u00a33,391m).
Non-recourse borrowings
\u2022 The Class B Surplus Notes have been issued by a US subsidiary of the Group as part of a coinsurance structure for the purpose of US
statutory regulations. The notes were issued in exchange for bonds of the same value from an unrelated party. These notes were
reclassified to Liabilities of operations classified as held for sale, with a value of \u00a31,411m as at the reclassification date.
\u2022 The revolving credit facilities to Affordable Homes are subject to agreed covenants, the breach of which could result in a charge on the
land and\u00a0work in progress of Legal & General Affordable Homes (Development 2) Limited and Legal & General Affordable Homes
(Development 3) Limited and charge on investment property on Legal & General Affordable Homes Limited.
\u2022 Legal & General Homes Modular Limited\u2019s revolving credit facility has been repaid in March 2025. This was secured by way of fixed
charges over development properties owned by\u00a0the\u00a0company and a fixed charge over the shares in the company.
\u2022 Suburban Build to Rent revolving credit facility is secured by way of fixed charges over development properties owned by the company
and a fixed charge over the shares in the company.
The carrying value of operational borrowings approximates their fair value. The presented fair values reflect observable market information
and\u00a0have been classified as Level 2 in the fair value hierarchy with the exception of the Affordable Homes revolving credit facilities which
have been classified as Level 3.
(iii) Analysis by maturity
Maturity profile of undiscounted cash flows
Carrying
amount
Within 1
year
1-5 years
5-15 years
15-25 years
Over 25
years
Total
As at 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Subordinated borrowings
5.5% Sterling subordinated notes 2064 (Tier 2)
13
(13)
\u2013
\u2013
\u2013
\u2013
(13)
5.25% US Dollar subordinated notes 2047 (Tier 2)
640
(9)
\u2013
\u2013
(700)
\u2013
(709)
5.55% US Dollar subordinated notes 2052 (Tier 2)
374
(4)
\u2013
\u2013
\u2013
(399)
(403)
5.125% Sterling subordinated notes 2048 (Tier 2)
401
(3)
\u2013
\u2013
(400)
\u2013
(403)
3.75% Sterling subordinated notes 2049 (Tier 2)
600
(2)
\u2013
\u2013
(600)
\u2013
(602)
4.5% Sterling subordinated notes 2050 (Tier 2)
501
(4)
\u2013
\u2013
(500)
\u2013
(504)
6.625% Sterling subordinated notes 2055 (Tier 2)
602
(10)
\u2013
\u2013
\u2013
(600)
(610)
4.375% Euro subordinated notes 2055 (Tier 2)
613
(9)
\u2013
\u2013
\u2013
(610)
(619)
Client fund holdings of Group debt (Tier 2)
(47)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Senior borrowings
Sterling medium term notes 2031-2041
609
(11)
\u2013
(590)
(10)
\u2013
(611)
Client fund holdings of Group debt
(9)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total core borrowings
4,297
(65)
\u2013
(590)
(2,210)
(1,609)
(4,474)
Short-term operational borrowings
Euro Commercial Paper
50
(50)
\u2013
\u2013
\u2013
\u2013
(50)
Bank loans and overdrafts
14
(14)
\u2013
\u2013
\u2013
\u2013
(14)
Non-recourse borrowings
Affordable Homes revolving credit facilities
120
(120)
\u2013
\u2013
\u2013
\u2013
(120)
Suburban Build to Rent revolving credit facility
108
\u2013
(108)
\u2013
\u2013
\u2013
(108)
Total operational borrowings
292
(184)
(108)
\u2013
\u2013
\u2013
(292)
Total borrowings excluding unit linked borrowings 1
4,589
(249)
(108)
(590)
(2,210)
(1,609)
(4,766)
Contractual undiscounted interest payments
(221)
(883)
(1,924)
(1,678)
(343)
(5,049)
Total contractual undiscounted cash flows
(470)
(991)
(2,514)
(3,888)
(1,952)
(9,815)
1. Unit linked borrowings are excluded from the analysis above as the risk is retained by policyholders.
Maturity profile of undiscounted cash flows
Carrying
amount
Within 1
year
1-5 years
5-15 years
15-25 years
Over 25
years
Total
As at 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Subordinated borrowings
5.5% Sterling subordinated notes 2064 (Tier 2)
590
\u2013
\u2013
\u2013
\u2013
(600)
(600)
5.375% Sterling subordinated notes 2045 (Tier 2)
605
(6)
\u2013
\u2013
(600)
\u2013
(606)
5.25% US Dollar subordinated notes 2047 (Tier 2)
688
(10)
\u2013
\u2013
(700)
\u2013
(710)
5.55% US Dollar subordinated notes 2052 (Tier 2)
403
(4)
\u2013
\u2013
\u2013
(399)
(403)
5.125% Sterling subordinated notes 2048 (Tier 2)
401
(3)
\u2013
\u2013
(400)
\u2013
(403)
3.75% Sterling subordinated notes 2049 (Tier 2)
600
(2)
\u2013
\u2013
\u2013
(600)
(602)
4.5% Sterling subordinated notes 2050 (Tier 2)
501
(4)
\u2013
\u2013
\u2013
(500)
(504)
Client fund holdings of Group debt (Tier 2)
(77)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Senior borrowings
Sterling medium term notes 2031-2041
609
(11)
\u2013
(590)
(10)
\u2013
(611)
Client fund holdings of Group debt
(12)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total core borrowings
4,308
(40)
\u2013
(590)
(1,710)
(2,099)
(4,439)
Short-term operational borrowings
Euro Commercial Paper
50
(50)
\u2013
\u2013
\u2013
\u2013
(50)
Bank loans and overdrafts
9
(9)
\u2013
\u2013
\u2013
\u2013
(9)
Non-recourse borrowings
Class B Surplus Notes
1,411
\u2013
\u2013
(769)
(644)
\u2013
(1,413)
Affordable Homes revolving credit facilities
185
(185)
\u2013
\u2013
\u2013
\u2013
(185)
Homes Modular revolving credit facility
11
(11)
\u2013
\u2013
\u2013
\u2013
(11)
Suburban Build to Rent revolving credit facility
68
\u2013
(68)
\u2013
\u2013
\u2013
(68)
Total operational borrowings
1,734
(255)
(68)
(769)
(644)
\u2013
(1,736)
Total borrowings excluding unit linked borrowings1
6,042
(295)
(68)
(1,359)
(2,354)
(2,099)
(6,175)
Contractual undiscounted interest payments
(332)
(1,318)
(2,781)
(1,849)
(556)
(6,836)
Total contractual undiscounted cash flows
(627)
(1,386)
(4,140)
(4,203)
(2,655)
(13,011)
1. Unit linked borrowings are excluded from the analysis above as the risk is retained by policyholders.
The maturity profile above is calculated on the basis that a facility to refinance a maturing loan is not recognised unless the facility and loan
are related. If refinancing under the Group\u2019s credit facilities was recognised, then all amounts shown as repayable within one year would be
reclassified as\u00a0repayable between one and five years.
Undiscounted interest payments are estimated based on the year end applicable interest rate and spot exchange rates.
Syndicated credit facility
The Group has in place a \u00a31.5bn syndicated committed revolving credit facility provided by a number of its key relationship banks, maturing
in\u00a0August 2029. No amounts were outstanding at either 31 December 2025 or 31 December 2024.
(iv) Movement in borrowings
2025
2024
\u00a3m
\u00a3m
As at 1 January
7,699
6,120
Cash movements:
Proceeds from borrowings
1,564
1,054
Repayment of borrowings
(1,578)
(473)
(Decrease)/increase in bank loans and overdrafts
(1,355)
1,271
Disposal of Cala
\u2013
(320)
Non-cash movements:
Amortisation
4
3
Foreign exchange rate movements
(91)
43
Transfers to held for sale 1
(1,411)
\u2013
Other
66
1
Total core and operational borrowings as at 31 December
4,898
7,699
1.Non-recourse borrowings held by the US insurance entity were reclassified to Liabilities of operations classified as held for sale, with a value of \u00a31,411m as at the reclassification date.
Refer to Note 4 for further details.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestExpenseExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-697": { "value": "
24. Borrowings
Borrowings comprise core borrowings such as subordinated Tier 2 bond issuance, long-term unsecured senior debt and operational
borrowings such as commercial paper issuance and bank borrowings under both committed and uncommitted debt facilities, including
bank overdrafts. Borrowings secured on specific assets/cash flows are included as non-recourse borrowings.
(i) Analysis by type
Borrowings
excluding
unit linked
borrowings
Unit linked
borrowings
Total
Borrowings
excluding
unit linked
borrowings
Unit linked
borrowings
Total
2025
2025
2025
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Core borrowings
4,297
\u2013
4,297
4,308
\u2013
4,308
Operational borrowings
292
309
601
1,734
1,657
3,391
Total borrowings
4,589
309
4,898
6,042
1,657
7,699
\u00a3229m of interest expense was incurred during the year (2024: \u00a3216m) on borrowings excluding non-recourse and unit linked borrowings.
The\u00a0total finance costs incurred in the year were \u00a3282m (2024: \u00a3273m), which also includes \u00a3 6m of finance costs on lease liabilities
(2024: \u00a37m). Finance costs of \u00a35m ( 2024: \u00a33m) were capitalised in the year.
(ii) Analysis by nature
(a) Core borrowings
Carrying
amount
Coupon rate
Fair value
Carrying
amount
Coupon rate
Fair value
2025
2025
2025
2024
2024
2024
\u00a3m
%
\u00a3m
\u00a3m
%
\u00a3m
Subordinated borrowings
5.5% Sterling subordinated notes 2064 (Tier 2)
13
5.50
13
590
5.50
565
5.375% Sterling subordinated notes 2045 (Tier 2)
\u2013
\u2013
\u2013
605
5.38
606
5.25% US Dollar subordinated notes 2047 (Tier 2)
640
5.25
644
688
5.25
684
5.55% US Dollar subordinated notes 2052 (Tier 2)
374
5.55
382
403
5.55
408
5.125% Sterling subordinated notes 2048 (Tier 2)
401
5.13
407
401
5.13
398
3.75% Sterling subordinated notes 2049 (Tier 2)
600
3.75
578
600
3.75
555
4.5% Sterling subordinated notes 2050 (Tier 2)
501
4.50
492
501
4.50
473
6.625% Sterling subordinated notes 2055 (Tier 2)
602
6.63
642
\u2013
\u2013
\u2013
4.375% Euro subordinated notes 2055 (Tier 2)
613
4.38
627
\u2013
\u2013
\u2013
Client fund holdings of Group debt (Tier 2)1
(47)
\u2013
(46)
(77)
\u2013
(73)
Total subordinated borrowings
3,697
\u2013
3,739
3,711
\u2013
3,616
Senior borrowings
Sterling medium term notes 2031-2041
609
5.87
645
609
5.87
633
Client fund holdings of Group debt 1
(9)
\u2013
(9)
(12)
\u2013
(12)
Total senior borrowings
600
\u2013
636
597
\u2013
621
Total core borrowings
4,297
\u2013
4,375
4,308
\u2013
4,237
1. \u00a356m (31 December 2024: \u00a389m) of the Group\u2019s subordinated and senior borrowings are held by L&G customers through unit linked products. These borrowings are shown
as\u00a0a\u00a0deduction from total core borrowings in the table above.
The presented fair values of the Group\u2019s core borrowings primarily reflect quoted prices in active markets and they have been classified
as Level 1 in the fair value hierarchy. The 5.55% US Dollar subordinated notes 2052 and \u00a350m (31 December 2024: \u00a349m) of the senior
borrowings are derived using prices from an external, publicly available pricing model by a standard market pricing source and have been
classified as Level 2 in the fair value hierarchy. The inputs for this model include a range of factors which are deemed to be observable,
including current market prices for comparative instruments, period to maturity and yield curves.
Subordinated borrowings
5.5% Sterling subordinated notes 2064
On 9 September 2025, Legal & General Group Plc completed a tender offer and redeemed \u00a3587m of these notes. On 2 February 2026,
Legal & General Group Plc redeemed the remaining \u00a313m of these notes following the capital disqualification event on 1 January 2026.
5.375% Sterling subordinated notes 2045
On 3 April 2025, Legal & General Group Plc completed a tender offer and redeemed \u00a3498m of these notes. On 27 October 2025,
Legal & General Group Plc redeemed the remaining \u00a3102m of these notes at their first call date.
5.25% US Dollar subordinated notes 2047
On 21 March 2017, Legal & General Group Plc issued $850m of 5.25% dated subordinated notes. The notes are callable at par on
21 March 2027 and every five years thereafter. If not called, the coupon from 21 March 2027 will be reset to the prevailing US Dollar
mid-swap rate plus 3.687% p.a. These notes mature on 21 March 2047.
5.55% US Dollar subordinated notes 2052
On 24 April 2017, Legal & General Group Plc issued $500m of 5.55% dated subordinated notes. The notes are callable at par on
24 April 2032 and every five years thereafter. If not called, the coupon from 24 April 2032 will be reset to the prevailing US Dollar
mid-swap rate plus 4.19% p.a. These notes mature on 24 April 2052.
5.125% Sterling subordinated notes 2048
On 14 November 2018, Legal & General Group Plc issued \u00a3400m of 5.125% dated subordinated notes. The notes are callable at par on
14 November 2028 and every five years thereafter. If not called, the coupon from 14 November 2028 will be reset to the prevailing five
year benchmark gilt yield plus 4.65% p.a. These notes mature on 14 November 2048.
3.75% Sterling subordinated notes 2049
On 26 November 2019, Legal & General Group Plc issued \u00a3600m of 3.75% dated subordinated notes. The notes are callable at par
on 26 November 2029 and every five years thereafter. If not called, the coupon from 26 November 2029 will be reset to the prevailing
five year benchmark gilt yield plus 4.05% p.a. These notes mature on 26 November 2049.
4.5% Sterling subordinated notes 2050
On 1 May 2020, Legal & General Group Plc issued \u00a3500m of 4.5% dated subordinated notes. The notes are callable at par on
1 November 2030 and every five years thereafter. If not called, the coupon from 1 November 2030 will be reset to the prevailing
five year benchmark gilt yield plus 5.25% p.a. These notes mature on 1 November 2050.
6.625% Sterling subordinated notes 2055
On 1 April 2025, Legal & General Group Plc issued \u00a3600m of 6.625% dated subordinated notes. The notes are callable at par from
1 October 2034 until 1 April 2035 and on each interest payment date thereafter. If not called, the coupon from 1 April 2035 will be
reset to the prevailing five year benchmark gilt yield plus 3% p.a. These notes mature on 1 April 2055.
4.375% Euro subordinated notes 2055
On 4 September 2025, Legal & General Group Plc issued \u20ac700m of 4.375% dated subordinated notes. The notes are callable at par from
4 March 2035 until 4 September 2035 and on each interest payment date thereafter. If not called, the coupon from 4 September 2035 will
be reset to the prevailing three month Euribor plus 2.8% with further resets every three months thereafter. These notes mature
on 4 September 2055.
All of the above subordinated notes are treated as Tier 2 Own Funds for Solvency II purposes unless stated otherwise.
Senior borrowings
Between 2000 and 2002 Legal & General Finance Plc issued \u00a3600m of senior unsecured Sterling medium term notes 2031-2041 at
coupons between 5.75% and 5.875%. These notes have various maturity dates between 2031 and 2041.
(b) Operational borrowings
Carrying
amount
Interest rate
Fair value
Carrying
amount
Interest rate
Fair value
2025
2025
2025
2024
2024
2024
\u00a3m
%
\u00a3m
\u00a3m
%
\u00a3m
Short-term operational borrowings
Euro Commercial Paper
50
4.42
50
50
5.26
50
Bank loans and overdrafts
14
\u2013
14
9
\u2013
9
Non-recourse borrowings
Class B Surplus Notes
\u2013
\u2013
\u2013
1,411
7.66
1,411
Affordable Homes revolving credit facilities
120
5.40
120
185
6.06
185
Homes Modular revolving credit facility
\u2013
\u2013
\u2013
11
8.02
11
Suburban Build to Rent revolving credit facility
108
6.40
108
68
7.13
68
Total operational borrowings 1
292
\u2013
292
1,734
\u2013
1,734
1. Unit linked borrowings with a carrying value of \u00a3309m (31 December 2024: \u00a31,657m) are excluded from the analysis above as the risk is retained by policyholders. Operational
borrowings including unit linked borrowings are \u00a3601m (31 December 2024: \u00a33,391m).
Non-recourse borrowings
\u2022 The Class B Surplus Notes have been issued by a US subsidiary of the Group as part of a coinsurance structure for the purpose of US
statutory regulations. The notes were issued in exchange for bonds of the same value from an unrelated party. These notes were
reclassified to Liabilities of operations classified as held for sale, with a value of \u00a31,411m as at the reclassification date.
\u2022 The revolving credit facilities to Affordable Homes are subject to agreed covenants, the breach of which could result in a charge on the
land and\u00a0work in progress of Legal & General Affordable Homes (Development 2) Limited and Legal & General Affordable Homes
(Development 3) Limited and charge on investment property on Legal & General Affordable Homes Limited.
\u2022 Legal & General Homes Modular Limited\u2019s revolving credit facility has been repaid in March 2025. This was secured by way of fixed
charges over development properties owned by\u00a0the\u00a0company and a fixed charge over the shares in the company.
\u2022 Suburban Build to Rent revolving credit facility is secured by way of fixed charges over development properties owned by the company
and a fixed charge over the shares in the company.
The carrying value of operational borrowings approximates their fair value. The presented fair values reflect observable market information
and\u00a0have been classified as Level 2 in the fair value hierarchy with the exception of the Affordable Homes revolving credit facilities which
have been classified as Level 3.
(iii) Analysis by maturity
Maturity profile of undiscounted cash flows
Carrying
amount
Within 1
year
1-5 years
5-15 years
15-25 years
Over 25
years
Total
As at 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Subordinated borrowings
5.5% Sterling subordinated notes 2064 (Tier 2)
13
(13)
\u2013
\u2013
\u2013
\u2013
(13)
5.25% US Dollar subordinated notes 2047 (Tier 2)
640
(9)
\u2013
\u2013
(700)
\u2013
(709)
5.55% US Dollar subordinated notes 2052 (Tier 2)
374
(4)
\u2013
\u2013
\u2013
(399)
(403)
5.125% Sterling subordinated notes 2048 (Tier 2)
401
(3)
\u2013
\u2013
(400)
\u2013
(403)
3.75% Sterling subordinated notes 2049 (Tier 2)
600
(2)
\u2013
\u2013
(600)
\u2013
(602)
4.5% Sterling subordinated notes 2050 (Tier 2)
501
(4)
\u2013
\u2013
(500)
\u2013
(504)
6.625% Sterling subordinated notes 2055 (Tier 2)
602
(10)
\u2013
\u2013
\u2013
(600)
(610)
4.375% Euro subordinated notes 2055 (Tier 2)
613
(9)
\u2013
\u2013
\u2013
(610)
(619)
Client fund holdings of Group debt (Tier 2)
(47)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Senior borrowings
Sterling medium term notes 2031-2041
609
(11)
\u2013
(590)
(10)
\u2013
(611)
Client fund holdings of Group debt
(9)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total core borrowings
4,297
(65)
\u2013
(590)
(2,210)
(1,609)
(4,474)
Short-term operational borrowings
Euro Commercial Paper
50
(50)
\u2013
\u2013
\u2013
\u2013
(50)
Bank loans and overdrafts
14
(14)
\u2013
\u2013
\u2013
\u2013
(14)
Non-recourse borrowings
Affordable Homes revolving credit facilities
120
(120)
\u2013
\u2013
\u2013
\u2013
(120)
Suburban Build to Rent revolving credit facility
108
\u2013
(108)
\u2013
\u2013
\u2013
(108)
Total operational borrowings
292
(184)
(108)
\u2013
\u2013
\u2013
(292)
Total borrowings excluding unit linked borrowings 1
4,589
(249)
(108)
(590)
(2,210)
(1,609)
(4,766)
Contractual undiscounted interest payments
(221)
(883)
(1,924)
(1,678)
(343)
(5,049)
Total contractual undiscounted cash flows
(470)
(991)
(2,514)
(3,888)
(1,952)
(9,815)
1. Unit linked borrowings are excluded from the analysis above as the risk is retained by policyholders.
Maturity profile of undiscounted cash flows
Carrying
amount
Within 1
year
1-5 years
5-15 years
15-25 years
Over 25
years
Total
As at 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Subordinated borrowings
5.5% Sterling subordinated notes 2064 (Tier 2)
590
\u2013
\u2013
\u2013
\u2013
(600)
(600)
5.375% Sterling subordinated notes 2045 (Tier 2)
605
(6)
\u2013
\u2013
(600)
\u2013
(606)
5.25% US Dollar subordinated notes 2047 (Tier 2)
688
(10)
\u2013
\u2013
(700)
\u2013
(710)
5.55% US Dollar subordinated notes 2052 (Tier 2)
403
(4)
\u2013
\u2013
\u2013
(399)
(403)
5.125% Sterling subordinated notes 2048 (Tier 2)
401
(3)
\u2013
\u2013
(400)
\u2013
(403)
3.75% Sterling subordinated notes 2049 (Tier 2)
600
(2)
\u2013
\u2013
\u2013
(600)
(602)
4.5% Sterling subordinated notes 2050 (Tier 2)
501
(4)
\u2013
\u2013
\u2013
(500)
(504)
Client fund holdings of Group debt (Tier 2)
(77)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Senior borrowings
Sterling medium term notes 2031-2041
609
(11)
\u2013
(590)
(10)
\u2013
(611)
Client fund holdings of Group debt
(12)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total core borrowings
4,308
(40)
\u2013
(590)
(1,710)
(2,099)
(4,439)
Short-term operational borrowings
Euro Commercial Paper
50
(50)
\u2013
\u2013
\u2013
\u2013
(50)
Bank loans and overdrafts
9
(9)
\u2013
\u2013
\u2013
\u2013
(9)
Non-recourse borrowings
Class B Surplus Notes
1,411
\u2013
\u2013
(769)
(644)
\u2013
(1,413)
Affordable Homes revolving credit facilities
185
(185)
\u2013
\u2013
\u2013
\u2013
(185)
Homes Modular revolving credit facility
11
(11)
\u2013
\u2013
\u2013
\u2013
(11)
Suburban Build to Rent revolving credit facility
68
\u2013
(68)
\u2013
\u2013
\u2013
(68)
Total operational borrowings
1,734
(255)
(68)
(769)
(644)
\u2013
(1,736)
Total borrowings excluding unit linked borrowings1
6,042
(295)
(68)
(1,359)
(2,354)
(2,099)
(6,175)
Contractual undiscounted interest payments
(332)
(1,318)
(2,781)
(1,849)
(556)
(6,836)
Total contractual undiscounted cash flows
(627)
(1,386)
(4,140)
(4,203)
(2,655)
(13,011)
1. Unit linked borrowings are excluded from the analysis above as the risk is retained by policyholders.
The maturity profile above is calculated on the basis that a facility to refinance a maturing loan is not recognised unless the facility and loan
are related. If refinancing under the Group\u2019s credit facilities was recognised, then all amounts shown as repayable within one year would be
reclassified as\u00a0repayable between one and five years.
Undiscounted interest payments are estimated based on the year end applicable interest rate and spot exchange rates.
Syndicated credit facility
The Group has in place a \u00a31.5bn syndicated committed revolving credit facility provided by a number of its key relationship banks, maturing
in\u00a0August 2029. No amounts were outstanding at either 31 December 2025 or 31 December 2024.
(iv) Movement in borrowings
2025
2024
\u00a3m
\u00a3m
As at 1 January
7,699
6,120
Cash movements:
Proceeds from borrowings
1,564
1,054
Repayment of borrowings
(1,578)
(473)
(Decrease)/increase in bank loans and overdrafts
(1,355)
1,271
Disposal of Cala
\u2013
(320)
Non-cash movements:
Amortisation
4
3
Foreign exchange rate movements
(91)
43
Transfers to held for sale 1
(1,411)
\u2013
Other
66
1
Total core and operational borrowings as at 31 December
4,898
7,699
1.Non-recourse borrowings held by the US insurance entity were reclassified to Liabilities of operations classified as held for sale, with a value of \u00a31,411m as at the reclassification date.
Refer to Note 4 for further details.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceCostExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-696": { "value": "
24. Borrowings
Borrowings comprise core borrowings such as subordinated Tier 2 bond issuance, long-term unsecured senior debt and operational
borrowings such as commercial paper issuance and bank borrowings under both committed and uncommitted debt facilities, including
bank overdrafts. Borrowings secured on specific assets/cash flows are included as non-recourse borrowings.
(i) Analysis by type
Borrowings
excluding
unit linked
borrowings
Unit linked
borrowings
Total
Borrowings
excluding
unit linked
borrowings
Unit linked
borrowings
Total
2025
2025
2025
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Core borrowings
4,297
\u2013
4,297
4,308
\u2013
4,308
Operational borrowings
292
309
601
1,734
1,657
3,391
Total borrowings
4,589
309
4,898
6,042
1,657
7,699
\u00a3229m of interest expense was incurred during the year (2024: \u00a3216m) on borrowings excluding non-recourse and unit linked borrowings.
The\u00a0total finance costs incurred in the year were \u00a3282m (2024: \u00a3273m), which also includes \u00a3 6m of finance costs on lease liabilities
(2024: \u00a37m). Finance costs of \u00a35m ( 2024: \u00a33m) were capitalised in the year.
(ii) Analysis by nature
(a) Core borrowings
Carrying
amount
Coupon rate
Fair value
Carrying
amount
Coupon rate
Fair value
2025
2025
2025
2024
2024
2024
\u00a3m
%
\u00a3m
\u00a3m
%
\u00a3m
Subordinated borrowings
5.5% Sterling subordinated notes 2064 (Tier 2)
13
5.50
13
590
5.50
565
5.375% Sterling subordinated notes 2045 (Tier 2)
\u2013
\u2013
\u2013
605
5.38
606
5.25% US Dollar subordinated notes 2047 (Tier 2)
640
5.25
644
688
5.25
684
5.55% US Dollar subordinated notes 2052 (Tier 2)
374
5.55
382
403
5.55
408
5.125% Sterling subordinated notes 2048 (Tier 2)
401
5.13
407
401
5.13
398
3.75% Sterling subordinated notes 2049 (Tier 2)
600
3.75
578
600
3.75
555
4.5% Sterling subordinated notes 2050 (Tier 2)
501
4.50
492
501
4.50
473
6.625% Sterling subordinated notes 2055 (Tier 2)
602
6.63
642
\u2013
\u2013
\u2013
4.375% Euro subordinated notes 2055 (Tier 2)
613
4.38
627
\u2013
\u2013
\u2013
Client fund holdings of Group debt (Tier 2)1
(47)
\u2013
(46)
(77)
\u2013
(73)
Total subordinated borrowings
3,697
\u2013
3,739
3,711
\u2013
3,616
Senior borrowings
Sterling medium term notes 2031-2041
609
5.87
645
609
5.87
633
Client fund holdings of Group debt 1
(9)
\u2013
(9)
(12)
\u2013
(12)
Total senior borrowings
600
\u2013
636
597
\u2013
621
Total core borrowings
4,297
\u2013
4,375
4,308
\u2013
4,237
1. \u00a356m (31 December 2024: \u00a389m) of the Group\u2019s subordinated and senior borrowings are held by L&G customers through unit linked products. These borrowings are shown
as\u00a0a\u00a0deduction from total core borrowings in the table above.
The presented fair values of the Group\u2019s core borrowings primarily reflect quoted prices in active markets and they have been classified
as Level 1 in the fair value hierarchy. The 5.55% US Dollar subordinated notes 2052 and \u00a350m (31 December 2024: \u00a349m) of the senior
borrowings are derived using prices from an external, publicly available pricing model by a standard market pricing source and have been
classified as Level 2 in the fair value hierarchy. The inputs for this model include a range of factors which are deemed to be observable,
including current market prices for comparative instruments, period to maturity and yield curves.
Subordinated borrowings
5.5% Sterling subordinated notes 2064
On 9 September 2025, Legal & General Group Plc completed a tender offer and redeemed \u00a3587m of these notes. On 2 February 2026,
Legal & General Group Plc redeemed the remaining \u00a313m of these notes following the capital disqualification event on 1 January 2026.
5.375% Sterling subordinated notes 2045
On 3 April 2025, Legal & General Group Plc completed a tender offer and redeemed \u00a3498m of these notes. On 27 October 2025,
Legal & General Group Plc redeemed the remaining \u00a3102m of these notes at their first call date.
5.25% US Dollar subordinated notes 2047
On 21 March 2017, Legal & General Group Plc issued $850m of 5.25% dated subordinated notes. The notes are callable at par on
21 March 2027 and every five years thereafter. If not called, the coupon from 21 March 2027 will be reset to the prevailing US Dollar
mid-swap rate plus 3.687% p.a. These notes mature on 21 March 2047.
5.55% US Dollar subordinated notes 2052
On 24 April 2017, Legal & General Group Plc issued $500m of 5.55% dated subordinated notes. The notes are callable at par on
24 April 2032 and every five years thereafter. If not called, the coupon from 24 April 2032 will be reset to the prevailing US Dollar
mid-swap rate plus 4.19% p.a. These notes mature on 24 April 2052.
5.125% Sterling subordinated notes 2048
On 14 November 2018, Legal & General Group Plc issued \u00a3400m of 5.125% dated subordinated notes. The notes are callable at par on
14 November 2028 and every five years thereafter. If not called, the coupon from 14 November 2028 will be reset to the prevailing five
year benchmark gilt yield plus 4.65% p.a. These notes mature on 14 November 2048.
3.75% Sterling subordinated notes 2049
On 26 November 2019, Legal & General Group Plc issued \u00a3600m of 3.75% dated subordinated notes. The notes are callable at par
on 26 November 2029 and every five years thereafter. If not called, the coupon from 26 November 2029 will be reset to the prevailing
five year benchmark gilt yield plus 4.05% p.a. These notes mature on 26 November 2049.
4.5% Sterling subordinated notes 2050
On 1 May 2020, Legal & General Group Plc issued \u00a3500m of 4.5% dated subordinated notes. The notes are callable at par on
1 November 2030 and every five years thereafter. If not called, the coupon from 1 November 2030 will be reset to the prevailing
five year benchmark gilt yield plus 5.25% p.a. These notes mature on 1 November 2050.
6.625% Sterling subordinated notes 2055
On 1 April 2025, Legal & General Group Plc issued \u00a3600m of 6.625% dated subordinated notes. The notes are callable at par from
1 October 2034 until 1 April 2035 and on each interest payment date thereafter. If not called, the coupon from 1 April 2035 will be
reset to the prevailing five year benchmark gilt yield plus 3% p.a. These notes mature on 1 April 2055.
4.375% Euro subordinated notes 2055
On 4 September 2025, Legal & General Group Plc issued \u20ac700m of 4.375% dated subordinated notes. The notes are callable at par from
4 March 2035 until 4 September 2035 and on each interest payment date thereafter. If not called, the coupon from 4 September 2035 will
be reset to the prevailing three month Euribor plus 2.8% with further resets every three months thereafter. These notes mature
on 4 September 2055.
All of the above subordinated notes are treated as Tier 2 Own Funds for Solvency II purposes unless stated otherwise.
Senior borrowings
Between 2000 and 2002 Legal & General Finance Plc issued \u00a3600m of senior unsecured Sterling medium term notes 2031-2041 at
coupons between 5.75% and 5.875%. These notes have various maturity dates between 2031 and 2041.
(b) Operational borrowings
Carrying
amount
Interest rate
Fair value
Carrying
amount
Interest rate
Fair value
2025
2025
2025
2024
2024
2024
\u00a3m
%
\u00a3m
\u00a3m
%
\u00a3m
Short-term operational borrowings
Euro Commercial Paper
50
4.42
50
50
5.26
50
Bank loans and overdrafts
14
\u2013
14
9
\u2013
9
Non-recourse borrowings
Class B Surplus Notes
\u2013
\u2013
\u2013
1,411
7.66
1,411
Affordable Homes revolving credit facilities
120
5.40
120
185
6.06
185
Homes Modular revolving credit facility
\u2013
\u2013
\u2013
11
8.02
11
Suburban Build to Rent revolving credit facility
108
6.40
108
68
7.13
68
Total operational borrowings 1
292
\u2013
292
1,734
\u2013
1,734
1. Unit linked borrowings with a carrying value of \u00a3309m (31 December 2024: \u00a31,657m) are excluded from the analysis above as the risk is retained by policyholders. Operational
borrowings including unit linked borrowings are \u00a3601m (31 December 2024: \u00a33,391m).
Non-recourse borrowings
\u2022 The Class B Surplus Notes have been issued by a US subsidiary of the Group as part of a coinsurance structure for the purpose of US
statutory regulations. The notes were issued in exchange for bonds of the same value from an unrelated party. These notes were
reclassified to Liabilities of operations classified as held for sale, with a value of \u00a31,411m as at the reclassification date.
\u2022 The revolving credit facilities to Affordable Homes are subject to agreed covenants, the breach of which could result in a charge on the
land and\u00a0work in progress of Legal & General Affordable Homes (Development 2) Limited and Legal & General Affordable Homes
(Development 3) Limited and charge on investment property on Legal & General Affordable Homes Limited.
\u2022 Legal & General Homes Modular Limited\u2019s revolving credit facility has been repaid in March 2025. This was secured by way of fixed
charges over development properties owned by\u00a0the\u00a0company and a fixed charge over the shares in the company.
\u2022 Suburban Build to Rent revolving credit facility is secured by way of fixed charges over development properties owned by the company
and a fixed charge over the shares in the company.
The carrying value of operational borrowings approximates their fair value. The presented fair values reflect observable market information
and\u00a0have been classified as Level 2 in the fair value hierarchy with the exception of the Affordable Homes revolving credit facilities which
have been classified as Level 3.
(iii) Analysis by maturity
Maturity profile of undiscounted cash flows
Carrying
amount
Within 1
year
1-5 years
5-15 years
15-25 years
Over 25
years
Total
As at 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Subordinated borrowings
5.5% Sterling subordinated notes 2064 (Tier 2)
13
(13)
\u2013
\u2013
\u2013
\u2013
(13)
5.25% US Dollar subordinated notes 2047 (Tier 2)
640
(9)
\u2013
\u2013
(700)
\u2013
(709)
5.55% US Dollar subordinated notes 2052 (Tier 2)
374
(4)
\u2013
\u2013
\u2013
(399)
(403)
5.125% Sterling subordinated notes 2048 (Tier 2)
401
(3)
\u2013
\u2013
(400)
\u2013
(403)
3.75% Sterling subordinated notes 2049 (Tier 2)
600
(2)
\u2013
\u2013
(600)
\u2013
(602)
4.5% Sterling subordinated notes 2050 (Tier 2)
501
(4)
\u2013
\u2013
(500)
\u2013
(504)
6.625% Sterling subordinated notes 2055 (Tier 2)
602
(10)
\u2013
\u2013
\u2013
(600)
(610)
4.375% Euro subordinated notes 2055 (Tier 2)
613
(9)
\u2013
\u2013
\u2013
(610)
(619)
Client fund holdings of Group debt (Tier 2)
(47)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Senior borrowings
Sterling medium term notes 2031-2041
609
(11)
\u2013
(590)
(10)
\u2013
(611)
Client fund holdings of Group debt
(9)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total core borrowings
4,297
(65)
\u2013
(590)
(2,210)
(1,609)
(4,474)
Short-term operational borrowings
Euro Commercial Paper
50
(50)
\u2013
\u2013
\u2013
\u2013
(50)
Bank loans and overdrafts
14
(14)
\u2013
\u2013
\u2013
\u2013
(14)
Non-recourse borrowings
Affordable Homes revolving credit facilities
120
(120)
\u2013
\u2013
\u2013
\u2013
(120)
Suburban Build to Rent revolving credit facility
108
\u2013
(108)
\u2013
\u2013
\u2013
(108)
Total operational borrowings
292
(184)
(108)
\u2013
\u2013
\u2013
(292)
Total borrowings excluding unit linked borrowings 1
4,589
(249)
(108)
(590)
(2,210)
(1,609)
(4,766)
Contractual undiscounted interest payments
(221)
(883)
(1,924)
(1,678)
(343)
(5,049)
Total contractual undiscounted cash flows
(470)
(991)
(2,514)
(3,888)
(1,952)
(9,815)
1. Unit linked borrowings are excluded from the analysis above as the risk is retained by policyholders.
Maturity profile of undiscounted cash flows
Carrying
amount
Within 1
year
1-5 years
5-15 years
15-25 years
Over 25
years
Total
As at 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Subordinated borrowings
5.5% Sterling subordinated notes 2064 (Tier 2)
590
\u2013
\u2013
\u2013
\u2013
(600)
(600)
5.375% Sterling subordinated notes 2045 (Tier 2)
605
(6)
\u2013
\u2013
(600)
\u2013
(606)
5.25% US Dollar subordinated notes 2047 (Tier 2)
688
(10)
\u2013
\u2013
(700)
\u2013
(710)
5.55% US Dollar subordinated notes 2052 (Tier 2)
403
(4)
\u2013
\u2013
\u2013
(399)
(403)
5.125% Sterling subordinated notes 2048 (Tier 2)
401
(3)
\u2013
\u2013
(400)
\u2013
(403)
3.75% Sterling subordinated notes 2049 (Tier 2)
600
(2)
\u2013
\u2013
\u2013
(600)
(602)
4.5% Sterling subordinated notes 2050 (Tier 2)
501
(4)
\u2013
\u2013
\u2013
(500)
(504)
Client fund holdings of Group debt (Tier 2)
(77)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Senior borrowings
Sterling medium term notes 2031-2041
609
(11)
\u2013
(590)
(10)
\u2013
(611)
Client fund holdings of Group debt
(12)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total core borrowings
4,308
(40)
\u2013
(590)
(1,710)
(2,099)
(4,439)
Short-term operational borrowings
Euro Commercial Paper
50
(50)
\u2013
\u2013
\u2013
\u2013
(50)
Bank loans and overdrafts
9
(9)
\u2013
\u2013
\u2013
\u2013
(9)
Non-recourse borrowings
Class B Surplus Notes
1,411
\u2013
\u2013
(769)
(644)
\u2013
(1,413)
Affordable Homes revolving credit facilities
185
(185)
\u2013
\u2013
\u2013
\u2013
(185)
Homes Modular revolving credit facility
11
(11)
\u2013
\u2013
\u2013
\u2013
(11)
Suburban Build to Rent revolving credit facility
68
\u2013
(68)
\u2013
\u2013
\u2013
(68)
Total operational borrowings
1,734
(255)
(68)
(769)
(644)
\u2013
(1,736)
Total borrowings excluding unit linked borrowings1
6,042
(295)
(68)
(1,359)
(2,354)
(2,099)
(6,175)
Contractual undiscounted interest payments
(332)
(1,318)
(2,781)
(1,849)
(556)
(6,836)
Total contractual undiscounted cash flows
(627)
(1,386)
(4,140)
(4,203)
(2,655)
(13,011)
1. Unit linked borrowings are excluded from the analysis above as the risk is retained by policyholders.
The maturity profile above is calculated on the basis that a facility to refinance a maturing loan is not recognised unless the facility and loan
are related. If refinancing under the Group\u2019s credit facilities was recognised, then all amounts shown as repayable within one year would be
reclassified as\u00a0repayable between one and five years.
Undiscounted interest payments are estimated based on the year end applicable interest rate and spot exchange rates.
Syndicated credit facility
The Group has in place a \u00a31.5bn syndicated committed revolving credit facility provided by a number of its key relationship banks, maturing
in\u00a0August 2029. No amounts were outstanding at either 31 December 2025 or 31 December 2024.
(iv) Movement in borrowings
2025
2024
\u00a3m
\u00a3m
As at 1 January
7,699
6,120
Cash movements:
Proceeds from borrowings
1,564
1,054
Repayment of borrowings
(1,578)
(473)
(Decrease)/increase in bank loans and overdrafts
(1,355)
1,271
Disposal of Cala
\u2013
(320)
Non-cash movements:
Amortisation
4
3
Foreign exchange rate movements
(91)
43
Transfers to held for sale 1
(1,411)
\u2013
Other
66
1
Total core and operational borrowings as at 31 December
4,898
7,699
1.Non-recourse borrowings held by the US insurance entity were reclassified to Liabilities of operations classified as held for sale, with a value of \u00a31,411m as at the reclassification date.
Refer to Note 4 for further details.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBorrowingCostsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-695": { "value": "
24. Borrowings
Borrowings comprise core borrowings such as subordinated Tier 2 bond issuance, long-term unsecured senior debt and operational
borrowings such as commercial paper issuance and bank borrowings under both committed and uncommitted debt facilities, including
bank overdrafts. Borrowings secured on specific assets/cash flows are included as non-recourse borrowings.
(i) Analysis by type
Borrowings
excluding
unit linked
borrowings
Unit linked
borrowings
Total
Borrowings
excluding
unit linked
borrowings
Unit linked
borrowings
Total
2025
2025
2025
2024
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Core borrowings
4,297
\u2013
4,297
4,308
\u2013
4,308
Operational borrowings
292
309
601
1,734
1,657
3,391
Total borrowings
4,589
309
4,898
6,042
1,657
7,699
\u00a3229m of interest expense was incurred during the year (2024: \u00a3216m) on borrowings excluding non-recourse and unit linked borrowings.
The\u00a0total finance costs incurred in the year were \u00a3282m (2024: \u00a3273m), which also includes \u00a3 6m of finance costs on lease liabilities
(2024: \u00a37m). Finance costs of \u00a35m ( 2024: \u00a33m) were capitalised in the year.
(ii) Analysis by nature
(a) Core borrowings
Carrying
amount
Coupon rate
Fair value
Carrying
amount
Coupon rate
Fair value
2025
2025
2025
2024
2024
2024
\u00a3m
%
\u00a3m
\u00a3m
%
\u00a3m
Subordinated borrowings
5.5% Sterling subordinated notes 2064 (Tier 2)
13
5.50
13
590
5.50
565
5.375% Sterling subordinated notes 2045 (Tier 2)
\u2013
\u2013
\u2013
605
5.38
606
5.25% US Dollar subordinated notes 2047 (Tier 2)
640
5.25
644
688
5.25
684
5.55% US Dollar subordinated notes 2052 (Tier 2)
374
5.55
382
403
5.55
408
5.125% Sterling subordinated notes 2048 (Tier 2)
401
5.13
407
401
5.13
398
3.75% Sterling subordinated notes 2049 (Tier 2)
600
3.75
578
600
3.75
555
4.5% Sterling subordinated notes 2050 (Tier 2)
501
4.50
492
501
4.50
473
6.625% Sterling subordinated notes 2055 (Tier 2)
602
6.63
642
\u2013
\u2013
\u2013
4.375% Euro subordinated notes 2055 (Tier 2)
613
4.38
627
\u2013
\u2013
\u2013
Client fund holdings of Group debt (Tier 2)1
(47)
\u2013
(46)
(77)
\u2013
(73)
Total subordinated borrowings
3,697
\u2013
3,739
3,711
\u2013
3,616
Senior borrowings
Sterling medium term notes 2031-2041
609
5.87
645
609
5.87
633
Client fund holdings of Group debt 1
(9)
\u2013
(9)
(12)
\u2013
(12)
Total senior borrowings
600
\u2013
636
597
\u2013
621
Total core borrowings
4,297
\u2013
4,375
4,308
\u2013
4,237
1. \u00a356m (31 December 2024: \u00a389m) of the Group\u2019s subordinated and senior borrowings are held by L&G customers through unit linked products. These borrowings are shown
as\u00a0a\u00a0deduction from total core borrowings in the table above.
The presented fair values of the Group\u2019s core borrowings primarily reflect quoted prices in active markets and they have been classified
as Level 1 in the fair value hierarchy. The 5.55% US Dollar subordinated notes 2052 and \u00a350m (31 December 2024: \u00a349m) of the senior
borrowings are derived using prices from an external, publicly available pricing model by a standard market pricing source and have been
classified as Level 2 in the fair value hierarchy. The inputs for this model include a range of factors which are deemed to be observable,
including current market prices for comparative instruments, period to maturity and yield curves.
Subordinated borrowings
5.5% Sterling subordinated notes 2064
On 9 September 2025, Legal & General Group Plc completed a tender offer and redeemed \u00a3587m of these notes. On 2 February 2026,
Legal & General Group Plc redeemed the remaining \u00a313m of these notes following the capital disqualification event on 1 January 2026.
5.375% Sterling subordinated notes 2045
On 3 April 2025, Legal & General Group Plc completed a tender offer and redeemed \u00a3498m of these notes. On 27 October 2025,
Legal & General Group Plc redeemed the remaining \u00a3102m of these notes at their first call date.
5.25% US Dollar subordinated notes 2047
On 21 March 2017, Legal & General Group Plc issued $850m of 5.25% dated subordinated notes. The notes are callable at par on
21 March 2027 and every five years thereafter. If not called, the coupon from 21 March 2027 will be reset to the prevailing US Dollar
mid-swap rate plus 3.687% p.a. These notes mature on 21 March 2047.
5.55% US Dollar subordinated notes 2052
On 24 April 2017, Legal & General Group Plc issued $500m of 5.55% dated subordinated notes. The notes are callable at par on
24 April 2032 and every five years thereafter. If not called, the coupon from 24 April 2032 will be reset to the prevailing US Dollar
mid-swap rate plus 4.19% p.a. These notes mature on 24 April 2052.
5.125% Sterling subordinated notes 2048
On 14 November 2018, Legal & General Group Plc issued \u00a3400m of 5.125% dated subordinated notes. The notes are callable at par on
14 November 2028 and every five years thereafter. If not called, the coupon from 14 November 2028 will be reset to the prevailing five
year benchmark gilt yield plus 4.65% p.a. These notes mature on 14 November 2048.
3.75% Sterling subordinated notes 2049
On 26 November 2019, Legal & General Group Plc issued \u00a3600m of 3.75% dated subordinated notes. The notes are callable at par
on 26 November 2029 and every five years thereafter. If not called, the coupon from 26 November 2029 will be reset to the prevailing
five year benchmark gilt yield plus 4.05% p.a. These notes mature on 26 November 2049.
4.5% Sterling subordinated notes 2050
On 1 May 2020, Legal & General Group Plc issued \u00a3500m of 4.5% dated subordinated notes. The notes are callable at par on
1 November 2030 and every five years thereafter. If not called, the coupon from 1 November 2030 will be reset to the prevailing
five year benchmark gilt yield plus 5.25% p.a. These notes mature on 1 November 2050.
6.625% Sterling subordinated notes 2055
On 1 April 2025, Legal & General Group Plc issued \u00a3600m of 6.625% dated subordinated notes. The notes are callable at par from
1 October 2034 until 1 April 2035 and on each interest payment date thereafter. If not called, the coupon from 1 April 2035 will be
reset to the prevailing five year benchmark gilt yield plus 3% p.a. These notes mature on 1 April 2055.
4.375% Euro subordinated notes 2055
On 4 September 2025, Legal & General Group Plc issued \u20ac700m of 4.375% dated subordinated notes. The notes are callable at par from
4 March 2035 until 4 September 2035 and on each interest payment date thereafter. If not called, the coupon from 4 September 2035 will
be reset to the prevailing three month Euribor plus 2.8% with further resets every three months thereafter. These notes mature
on 4 September 2055.
All of the above subordinated notes are treated as Tier 2 Own Funds for Solvency II purposes unless stated otherwise.
Senior borrowings
Between 2000 and 2002 Legal & General Finance Plc issued \u00a3600m of senior unsecured Sterling medium term notes 2031-2041 at
coupons between 5.75% and 5.875%. These notes have various maturity dates between 2031 and 2041.
(b) Operational borrowings
Carrying
amount
Interest rate
Fair value
Carrying
amount
Interest rate
Fair value
2025
2025
2025
2024
2024
2024
\u00a3m
%
\u00a3m
\u00a3m
%
\u00a3m
Short-term operational borrowings
Euro Commercial Paper
50
4.42
50
50
5.26
50
Bank loans and overdrafts
14
\u2013
14
9
\u2013
9
Non-recourse borrowings
Class B Surplus Notes
\u2013
\u2013
\u2013
1,411
7.66
1,411
Affordable Homes revolving credit facilities
120
5.40
120
185
6.06
185
Homes Modular revolving credit facility
\u2013
\u2013
\u2013
11
8.02
11
Suburban Build to Rent revolving credit facility
108
6.40
108
68
7.13
68
Total operational borrowings 1
292
\u2013
292
1,734
\u2013
1,734
1. Unit linked borrowings with a carrying value of \u00a3309m (31 December 2024: \u00a31,657m) are excluded from the analysis above as the risk is retained by policyholders. Operational
borrowings including unit linked borrowings are \u00a3601m (31 December 2024: \u00a33,391m).
Non-recourse borrowings
\u2022 The Class B Surplus Notes have been issued by a US subsidiary of the Group as part of a coinsurance structure for the purpose of US
statutory regulations. The notes were issued in exchange for bonds of the same value from an unrelated party. These notes were
reclassified to Liabilities of operations classified as held for sale, with a value of \u00a31,411m as at the reclassification date.
\u2022 The revolving credit facilities to Affordable Homes are subject to agreed covenants, the breach of which could result in a charge on the
land and\u00a0work in progress of Legal & General Affordable Homes (Development 2) Limited and Legal & General Affordable Homes
(Development 3) Limited and charge on investment property on Legal & General Affordable Homes Limited.
\u2022 Legal & General Homes Modular Limited\u2019s revolving credit facility has been repaid in March 2025. This was secured by way of fixed
charges over development properties owned by\u00a0the\u00a0company and a fixed charge over the shares in the company.
\u2022 Suburban Build to Rent revolving credit facility is secured by way of fixed charges over development properties owned by the company
and a fixed charge over the shares in the company.
The carrying value of operational borrowings approximates their fair value. The presented fair values reflect observable market information
and\u00a0have been classified as Level 2 in the fair value hierarchy with the exception of the Affordable Homes revolving credit facilities which
have been classified as Level 3.
(iii) Analysis by maturity
Maturity profile of undiscounted cash flows
Carrying
amount
Within 1
year
1-5 years
5-15 years
15-25 years
Over 25
years
Total
As at 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Subordinated borrowings
5.5% Sterling subordinated notes 2064 (Tier 2)
13
(13)
\u2013
\u2013
\u2013
\u2013
(13)
5.25% US Dollar subordinated notes 2047 (Tier 2)
640
(9)
\u2013
\u2013
(700)
\u2013
(709)
5.55% US Dollar subordinated notes 2052 (Tier 2)
374
(4)
\u2013
\u2013
\u2013
(399)
(403)
5.125% Sterling subordinated notes 2048 (Tier 2)
401
(3)
\u2013
\u2013
(400)
\u2013
(403)
3.75% Sterling subordinated notes 2049 (Tier 2)
600
(2)
\u2013
\u2013
(600)
\u2013
(602)
4.5% Sterling subordinated notes 2050 (Tier 2)
501
(4)
\u2013
\u2013
(500)
\u2013
(504)
6.625% Sterling subordinated notes 2055 (Tier 2)
602
(10)
\u2013
\u2013
\u2013
(600)
(610)
4.375% Euro subordinated notes 2055 (Tier 2)
613
(9)
\u2013
\u2013
\u2013
(610)
(619)
Client fund holdings of Group debt (Tier 2)
(47)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Senior borrowings
Sterling medium term notes 2031-2041
609
(11)
\u2013
(590)
(10)
\u2013
(611)
Client fund holdings of Group debt
(9)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total core borrowings
4,297
(65)
\u2013
(590)
(2,210)
(1,609)
(4,474)
Short-term operational borrowings
Euro Commercial Paper
50
(50)
\u2013
\u2013
\u2013
\u2013
(50)
Bank loans and overdrafts
14
(14)
\u2013
\u2013
\u2013
\u2013
(14)
Non-recourse borrowings
Affordable Homes revolving credit facilities
120
(120)
\u2013
\u2013
\u2013
\u2013
(120)
Suburban Build to Rent revolving credit facility
108
\u2013
(108)
\u2013
\u2013
\u2013
(108)
Total operational borrowings
292
(184)
(108)
\u2013
\u2013
\u2013
(292)
Total borrowings excluding unit linked borrowings 1
4,589
(249)
(108)
(590)
(2,210)
(1,609)
(4,766)
Contractual undiscounted interest payments
(221)
(883)
(1,924)
(1,678)
(343)
(5,049)
Total contractual undiscounted cash flows
(470)
(991)
(2,514)
(3,888)
(1,952)
(9,815)
1. Unit linked borrowings are excluded from the analysis above as the risk is retained by policyholders.
Maturity profile of undiscounted cash flows
Carrying
amount
Within 1
year
1-5 years
5-15 years
15-25 years
Over 25
years
Total
As at 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Subordinated borrowings
5.5% Sterling subordinated notes 2064 (Tier 2)
590
\u2013
\u2013
\u2013
\u2013
(600)
(600)
5.375% Sterling subordinated notes 2045 (Tier 2)
605
(6)
\u2013
\u2013
(600)
\u2013
(606)
5.25% US Dollar subordinated notes 2047 (Tier 2)
688
(10)
\u2013
\u2013
(700)
\u2013
(710)
5.55% US Dollar subordinated notes 2052 (Tier 2)
403
(4)
\u2013
\u2013
\u2013
(399)
(403)
5.125% Sterling subordinated notes 2048 (Tier 2)
401
(3)
\u2013
\u2013
(400)
\u2013
(403)
3.75% Sterling subordinated notes 2049 (Tier 2)
600
(2)
\u2013
\u2013
\u2013
(600)
(602)
4.5% Sterling subordinated notes 2050 (Tier 2)
501
(4)
\u2013
\u2013
\u2013
(500)
(504)
Client fund holdings of Group debt (Tier 2)
(77)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Senior borrowings
Sterling medium term notes 2031-2041
609
(11)
\u2013
(590)
(10)
\u2013
(611)
Client fund holdings of Group debt
(12)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total core borrowings
4,308
(40)
\u2013
(590)
(1,710)
(2,099)
(4,439)
Short-term operational borrowings
Euro Commercial Paper
50
(50)
\u2013
\u2013
\u2013
\u2013
(50)
Bank loans and overdrafts
9
(9)
\u2013
\u2013
\u2013
\u2013
(9)
Non-recourse borrowings
Class B Surplus Notes
1,411
\u2013
\u2013
(769)
(644)
\u2013
(1,413)
Affordable Homes revolving credit facilities
185
(185)
\u2013
\u2013
\u2013
\u2013
(185)
Homes Modular revolving credit facility
11
(11)
\u2013
\u2013
\u2013
\u2013
(11)
Suburban Build to Rent revolving credit facility
68
\u2013
(68)
\u2013
\u2013
\u2013
(68)
Total operational borrowings
1,734
(255)
(68)
(769)
(644)
\u2013
(1,736)
Total borrowings excluding unit linked borrowings1
6,042
(295)
(68)
(1,359)
(2,354)
(2,099)
(6,175)
Contractual undiscounted interest payments
(332)
(1,318)
(2,781)
(1,849)
(556)
(6,836)
Total contractual undiscounted cash flows
(627)
(1,386)
(4,140)
(4,203)
(2,655)
(13,011)
1. Unit linked borrowings are excluded from the analysis above as the risk is retained by policyholders.
The maturity profile above is calculated on the basis that a facility to refinance a maturing loan is not recognised unless the facility and loan
are related. If refinancing under the Group\u2019s credit facilities was recognised, then all amounts shown as repayable within one year would be
reclassified as\u00a0repayable between one and five years.
Undiscounted interest payments are estimated based on the year end applicable interest rate and spot exchange rates.
Syndicated credit facility
The Group has in place a \u00a31.5bn syndicated committed revolving credit facility provided by a number of its key relationship banks, maturing
in\u00a0August 2029. No amounts were outstanding at either 31 December 2025 or 31 December 2024.
(iv) Movement in borrowings
2025
2024
\u00a3m
\u00a3m
As at 1 January
7,699
6,120
Cash movements:
Proceeds from borrowings
1,564
1,054
Repayment of borrowings
(1,578)
(473)
(Decrease)/increase in bank loans and overdrafts
(1,355)
1,271
Disposal of Cala
\u2013
(320)
Non-cash movements:
Amortisation
4
3
Foreign exchange rate movements
(91)
43
Transfers to held for sale 1
(1,411)
\u2013
Other
66
1
Total core and operational borrowings as at 31 December
4,898
7,699
1.Non-recourse borrowings held by the US insurance entity were reclassified to Liabilities of operations classified as held for sale, with a value of \u00a31,411m as at the reclassification date.
Refer to Note 4 for further details.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBorrowingsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-701": { "value": "
25. Provisions
Provisions include costs that the Asset Management division is committed to incur on the extension of its existing partnership with
State\u00a0Street announced in 2021, to increase the use of Charles River technology across the front office and to deliver middle office
services going\u00a0forward. Costs include the transfer of data and operations to State Street, as well as the implementation of the new
operating model. The\u00a0amounts included in the provision have been determined on a best estimate basis by reference to a range of
plausible scenarios, taking\u00a0into\u00a0account the multi-year implementation period for the project. As at 31 December 2025, the outstanding
provision was \u00a384m (31 December 2024: \u00a3 65m).
There are no retirement benefit obligations as at 31 December 2025 (31 December 2024: \u00a33m).
39. Contingent liabilities, guarantees and indemnities
Provision for the liabilities arising under contracts with policyholders is based on certain assumptions. The variance between actual
experience from that assumed may result in those liabilities differing from the provisions made for them. Liabilities may also arise in
respect of claims relating to the interpretation of policyholder contracts, or the circumstances in which policyholders have entered into
them. The extent of these liabilities is influenced by a number of factors including the actions and requirements of the PRA, FCA,
ombudsman rulings, industry compensation schemes and court judgments.
Various Group companies receive claims and become involved in actual or threatened litigation and regulatory issues from time to time.
The relevant members of the Group ensure that they make prudent provision as and when circumstances calling for such provision become
clear and that each has adequate capital and reserves to meet reasonably foreseeable eventualities. The provisions made are regularly
reviewed. It is not possible to predict, with certainty, the extent and the timing of the financial impact of these claims, litigation or issues.
Group companies have given warranties, indemnities and guarantees as a normal part of their business and operating activities or in relation
to capital market transactions or corporate disposals. Legal & General Group Plc has provided indemnities and guarantees in respect of the
liabilities of Group companies in support of their business activities. Legal and General Assurance Society Limited has provided indemnities,
a liquidity and expense risk agreement, a deed of support and a cash and securities liquidity facility in respect of the liabilities of Group
companies to facilitate the Group\u2019s matching adjustment reorganisation pursuant to Solvency II.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherProvisionsContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-700": { "value": "
25. Provisions
Provisions include costs that the Asset Management division is committed to incur on the extension of its existing partnership with
State\u00a0Street announced in 2021, to increase the use of Charles River technology across the front office and to deliver middle office
services going\u00a0forward. Costs include the transfer of data and operations to State Street, as well as the implementation of the new
operating model. The\u00a0amounts included in the provision have been determined on a best estimate basis by reference to a range of
plausible scenarios, taking\u00a0into\u00a0account the multi-year implementation period for the project. As at 31 December 2025, the outstanding
provision was \u00a384m (31 December 2024: \u00a3 65m).
There are no retirement benefit obligations as at 31 December 2025 (31 December 2024: \u00a33m).
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherProvisionsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-699": { "value": "
25. Provisions
Provisions include costs that the Asset Management division is committed to incur on the extension of its existing partnership with
State\u00a0Street announced in 2021, to increase the use of Charles River technology across the front office and to deliver middle office
services going\u00a0forward. Costs include the transfer of data and operations to State Street, as well as the implementation of the new
operating model. The\u00a0amounts included in the provision have been determined on a best estimate basis by reference to a range of
plausible scenarios, taking\u00a0into\u00a0account the multi-year implementation period for the project. As at 31 December 2025, the outstanding
provision was \u00a384m (31 December 2024: \u00a3 65m).
There are no retirement benefit obligations as at 31 December 2025 (31 December 2024: \u00a33m).
", "dimensions": { "concept": "ifrs-full:DisclosureOfProvisionsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-706": { "value": "
26. Payables and other financial liabilities
2025
2024
\u00a3m
\u00a3m
Derivative liabilities
51,218
57,873
Repurchase agreements 1
20,216
22,117
Other financial liabilities2
8,802
7,372
Total payables and other financial liabilities
80,236
87,362
Due within 12 months
29,004
28,124
Due after 12 months
51,232
59,238
1. Repurchase agreements are presented gross. However, they and their related assets (included within debt securities) are subject to master netting arrangements. The significant
majority of repurchase agreements are unit linked.
2. Other financial liabilities include trail commission, lease liabilities, FX spots, the value of short positions taken out to cover reverse repurchase agreements. The value of short positions as at
31 December 2025 was \u00a31,515m (2024: \u00a31,614m). Other financial liabilities also include the Group's obligation under a put option contract over Proprium's non-controlling interests.
Derivative liabilities and repurchase agreements are measured at fair value, with changes in fair value recognised in profit or\u00a0loss.
The fair value of derivative liabilities is derived using broker quotes or models such as option pricing models, simulation models or a
combination of models. The inputs for these models include a range of factors which are deemed to be observable, including current market
and contractual prices for underlying instruments, period to maturity, correlations, yield curves and volatility of the underlying instruments.
Repurchase agreements are valued based on the discounted cash flows expected to be paid, using an observable market interest rate, in line
with the value of the underlying security.
Within other financial liabilities, trail commission is measured at fair value through profit or loss. The balance represents a liability for the
present value of future commission costs on distribution agreements with intermediaries, recognised in the balance sheet on inception of
the contract and remeasured at subsequent reporting dates.
Collateral repayable on short position reverse repurchase agreements and other financial liabilities balances, including FX spots, broker
and other payables, are measured at amortised cost. The carrying value of these liabilities approximates their fair\u00a0value.
The Group's obligation under a put option contract over Proprium's non-controlling interests is measured at the present value of the redemption
amount. The valuation depends on a multiple of forecast fee earnings expected to be achieved by Proprium in 2031, as determined by a contractual
formula and up to a $375m cap. Discounting is performed at the Group\u2019s incremental borrowing rate. Significant unobservable inputs underpin the
valuation of the instrument, which has therefore been classified as Level 3 in the fair value hierarchy.
Fair value hierarchy
Total
Level 1
Level 2
Level 3
Amortised cost 1
As at 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Derivative liabilities
51,218
16
51,163
39
\u2013
Repurchase agreements
20,216
\u2013
20,216
\u2013
\u2013
Other financial liabilities
8,802
1,415
99
98
7,190
Total payables and other financial liabilities
80,236
1,431
71,478
137
7,190
Total
Level 1
Level 2
Level 3
Amortised cost 1
As at 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Derivative liabilities
57,873
522
57,318
33
\u2013
Repurchase agreements
22,117
\u2013
22,117
\u2013
\u2013
Other financial liabilities
7,372
2,797
53
\u2013
4,522
Total payables and other financial liabilities
87,362
3,319
79,488
33
4,522
1. The carrying value of payables and other financial liabilities at amortised cost approximates its fair value.
Significant transfers between levels
There have been no significant transfers of liabilities between Levels 1, 2 and 3 for the year ended 31 December 2025 (2024: no significant transfers).
37. Other liabilities
2025
2024
\u00a3m
\u00a3m
Accruals
506
597
Deferred income
10
12
Other
337
341
Total other liabilities
853
950
Due within 12 months
834
922
Due after 12 months
19
28
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherCurrentLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-705": { "value": "
26. Payables and other financial liabilities
2025
2024
\u00a3m
\u00a3m
Derivative liabilities
51,218
57,873
Repurchase agreements 1
20,216
22,117
Other financial liabilities2
8,802
7,372
Total payables and other financial liabilities
80,236
87,362
Due within 12 months
29,004
28,124
Due after 12 months
51,232
59,238
1. Repurchase agreements are presented gross. However, they and their related assets (included within debt securities) are subject to master netting arrangements. The significant
majority of repurchase agreements are unit linked.
2. Other financial liabilities include trail commission, lease liabilities, FX spots, the value of short positions taken out to cover reverse repurchase agreements. The value of short positions as at
31 December 2025 was \u00a31,515m (2024: \u00a31,614m). Other financial liabilities also include the Group's obligation under a put option contract over Proprium's non-controlling interests.
Derivative liabilities and repurchase agreements are measured at fair value, with changes in fair value recognised in profit or\u00a0loss.
The fair value of derivative liabilities is derived using broker quotes or models such as option pricing models, simulation models or a
combination of models. The inputs for these models include a range of factors which are deemed to be observable, including current market
and contractual prices for underlying instruments, period to maturity, correlations, yield curves and volatility of the underlying instruments.
Repurchase agreements are valued based on the discounted cash flows expected to be paid, using an observable market interest rate, in line
with the value of the underlying security.
Within other financial liabilities, trail commission is measured at fair value through profit or loss. The balance represents a liability for the
present value of future commission costs on distribution agreements with intermediaries, recognised in the balance sheet on inception of
the contract and remeasured at subsequent reporting dates.
Collateral repayable on short position reverse repurchase agreements and other financial liabilities balances, including FX spots, broker
and other payables, are measured at amortised cost. The carrying value of these liabilities approximates their fair\u00a0value.
The Group's obligation under a put option contract over Proprium's non-controlling interests is measured at the present value of the redemption
amount. The valuation depends on a multiple of forecast fee earnings expected to be achieved by Proprium in 2031, as determined by a contractual
formula and up to a $375m cap. Discounting is performed at the Group\u2019s incremental borrowing rate. Significant unobservable inputs underpin the
valuation of the instrument, which has therefore been classified as Level 3 in the fair value hierarchy.
Fair value hierarchy
Total
Level 1
Level 2
Level 3
Amortised cost 1
As at 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Derivative liabilities
51,218
16
51,163
39
\u2013
Repurchase agreements
20,216
\u2013
20,216
\u2013
\u2013
Other financial liabilities
8,802
1,415
99
98
7,190
Total payables and other financial liabilities
80,236
1,431
71,478
137
7,190
Total
Level 1
Level 2
Level 3
Amortised cost 1
As at 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Derivative liabilities
57,873
522
57,318
33
\u2013
Repurchase agreements
22,117
\u2013
22,117
\u2013
\u2013
Other financial liabilities
7,372
2,797
53
\u2013
4,522
Total payables and other financial liabilities
87,362
3,319
79,488
33
4,522
1. The carrying value of payables and other financial liabilities at amortised cost approximates its fair value.
Significant transfers between levels
There have been no significant transfers of liabilities between Levels 1, 2 and 3 for the year ended 31 December 2025 (2024: no significant transfers).
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-704": { "value": "
26. Payables and other financial liabilities
2025
2024
\u00a3m
\u00a3m
Derivative liabilities
51,218
57,873
Repurchase agreements 1
20,216
22,117
Other financial liabilities2
8,802
7,372
Total payables and other financial liabilities
80,236
87,362
Due within 12 months
29,004
28,124
Due after 12 months
51,232
59,238
1. Repurchase agreements are presented gross. However, they and their related assets (included within debt securities) are subject to master netting arrangements. The significant
majority of repurchase agreements are unit linked.
2. Other financial liabilities include trail commission, lease liabilities, FX spots, the value of short positions taken out to cover reverse repurchase agreements. The value of short positions as at
31 December 2025 was \u00a31,515m (2024: \u00a31,614m). Other financial liabilities also include the Group's obligation under a put option contract over Proprium's non-controlling interests.
Derivative liabilities and repurchase agreements are measured at fair value, with changes in fair value recognised in profit or\u00a0loss.
The fair value of derivative liabilities is derived using broker quotes or models such as option pricing models, simulation models or a
combination of models. The inputs for these models include a range of factors which are deemed to be observable, including current market
and contractual prices for underlying instruments, period to maturity, correlations, yield curves and volatility of the underlying instruments.
Repurchase agreements are valued based on the discounted cash flows expected to be paid, using an observable market interest rate, in line
with the value of the underlying security.
Within other financial liabilities, trail commission is measured at fair value through profit or loss. The balance represents a liability for the
present value of future commission costs on distribution agreements with intermediaries, recognised in the balance sheet on inception of
the contract and remeasured at subsequent reporting dates.
Collateral repayable on short position reverse repurchase agreements and other financial liabilities balances, including FX spots, broker
and other payables, are measured at amortised cost. The carrying value of these liabilities approximates their fair\u00a0value.
The Group's obligation under a put option contract over Proprium's non-controlling interests is measured at the present value of the redemption
amount. The valuation depends on a multiple of forecast fee earnings expected to be achieved by Proprium in 2031, as determined by a contractual
formula and up to a $375m cap. Discounting is performed at the Group\u2019s incremental borrowing rate. Significant unobservable inputs underpin the
valuation of the instrument, which has therefore been classified as Level 3 in the fair value hierarchy.
Fair value hierarchy
Total
Level 1
Level 2
Level 3
Amortised cost 1
As at 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Derivative liabilities
51,218
16
51,163
39
\u2013
Repurchase agreements
20,216
\u2013
20,216
\u2013
\u2013
Other financial liabilities
8,802
1,415
99
98
7,190
Total payables and other financial liabilities
80,236
1,431
71,478
137
7,190
Total
Level 1
Level 2
Level 3
Amortised cost 1
As at 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Derivative liabilities
57,873
522
57,318
33
\u2013
Repurchase agreements
22,117
\u2013
22,117
\u2013
\u2013
Other financial liabilities
7,372
2,797
53
\u2013
4,522
Total payables and other financial liabilities
87,362
3,319
79,488
33
4,522
1. The carrying value of payables and other financial liabilities at amortised cost approximates its fair value.
Significant transfers between levels
There have been no significant transfers of liabilities between Levels 1, 2 and 3 for the year ended 31 December 2025 (2024: no significant transfers).
37. Other liabilities
2025
2024
\u00a3m
\u00a3m
Accruals
506
597
Deferred income
10
12
Other
337
341
Total other liabilities
853
950
Due within 12 months
834
922
Due after 12 months
19
28
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherNoncurrentLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-703": { "value": "
26. Payables and other financial liabilities
2025
2024
\u00a3m
\u00a3m
Derivative liabilities
51,218
57,873
Repurchase agreements 1
20,216
22,117
Other financial liabilities2
8,802
7,372
Total payables and other financial liabilities
80,236
87,362
Due within 12 months
29,004
28,124
Due after 12 months
51,232
59,238
1. Repurchase agreements are presented gross. However, they and their related assets (included within debt securities) are subject to master netting arrangements. The significant
majority of repurchase agreements are unit linked.
2. Other financial liabilities include trail commission, lease liabilities, FX spots, the value of short positions taken out to cover reverse repurchase agreements. The value of short positions as at
31 December 2025 was \u00a31,515m (2024: \u00a31,614m). Other financial liabilities also include the Group's obligation under a put option contract over Proprium's non-controlling interests.
Derivative liabilities and repurchase agreements are measured at fair value, with changes in fair value recognised in profit or\u00a0loss.
The fair value of derivative liabilities is derived using broker quotes or models such as option pricing models, simulation models or a
combination of models. The inputs for these models include a range of factors which are deemed to be observable, including current market
and contractual prices for underlying instruments, period to maturity, correlations, yield curves and volatility of the underlying instruments.
Repurchase agreements are valued based on the discounted cash flows expected to be paid, using an observable market interest rate, in line
with the value of the underlying security.
Within other financial liabilities, trail commission is measured at fair value through profit or loss. The balance represents a liability for the
present value of future commission costs on distribution agreements with intermediaries, recognised in the balance sheet on inception of
the contract and remeasured at subsequent reporting dates.
Collateral repayable on short position reverse repurchase agreements and other financial liabilities balances, including FX spots, broker
and other payables, are measured at amortised cost. The carrying value of these liabilities approximates their fair\u00a0value.
The Group's obligation under a put option contract over Proprium's non-controlling interests is measured at the present value of the redemption
amount. The valuation depends on a multiple of forecast fee earnings expected to be achieved by Proprium in 2031, as determined by a contractual
formula and up to a $375m cap. Discounting is performed at the Group\u2019s incremental borrowing rate. Significant unobservable inputs underpin the
valuation of the instrument, which has therefore been classified as Level 3 in the fair value hierarchy.
Fair value hierarchy
Total
Level 1
Level 2
Level 3
Amortised cost 1
As at 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Derivative liabilities
51,218
16
51,163
39
\u2013
Repurchase agreements
20,216
\u2013
20,216
\u2013
\u2013
Other financial liabilities
8,802
1,415
99
98
7,190
Total payables and other financial liabilities
80,236
1,431
71,478
137
7,190
Total
Level 1
Level 2
Level 3
Amortised cost 1
As at 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Derivative liabilities
57,873
522
57,318
33
\u2013
Repurchase agreements
22,117
\u2013
22,117
\u2013
\u2013
Other financial liabilities
7,372
2,797
53
\u2013
4,522
Total payables and other financial liabilities
87,362
3,319
79,488
33
4,522
1. The carrying value of payables and other financial liabilities at amortised cost approximates its fair value.
Significant transfers between levels
There have been no significant transfers of liabilities between Levels 1, 2 and 3 for the year ended 31 December 2025 (2024: no significant transfers).
37. Other liabilities
2025
2024
\u00a3m
\u00a3m
Accruals
506
597
Deferred income
10
12
Other
337
341
Total other liabilities
853
950
Due within 12 months
834
922
Due after 12 months
19
28
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-702": { "value": "
26. Payables and other financial liabilities
2025
2024
\u00a3m
\u00a3m
Derivative liabilities
51,218
57,873
Repurchase agreements 1
20,216
22,117
Other financial liabilities2
8,802
7,372
Total payables and other financial liabilities
80,236
87,362
Due within 12 months
29,004
28,124
Due after 12 months
51,232
59,238
1. Repurchase agreements are presented gross. However, they and their related assets (included within debt securities) are subject to master netting arrangements. The significant
majority of repurchase agreements are unit linked.
2. Other financial liabilities include trail commission, lease liabilities, FX spots, the value of short positions taken out to cover reverse repurchase agreements. The value of short positions as at
31 December 2025 was \u00a31,515m (2024: \u00a31,614m). Other financial liabilities also include the Group's obligation under a put option contract over Proprium's non-controlling interests.
Derivative liabilities and repurchase agreements are measured at fair value, with changes in fair value recognised in profit or\u00a0loss.
The fair value of derivative liabilities is derived using broker quotes or models such as option pricing models, simulation models or a
combination of models. The inputs for these models include a range of factors which are deemed to be observable, including current market
and contractual prices for underlying instruments, period to maturity, correlations, yield curves and volatility of the underlying instruments.
Repurchase agreements are valued based on the discounted cash flows expected to be paid, using an observable market interest rate, in line
with the value of the underlying security.
Within other financial liabilities, trail commission is measured at fair value through profit or loss. The balance represents a liability for the
present value of future commission costs on distribution agreements with intermediaries, recognised in the balance sheet on inception of
the contract and remeasured at subsequent reporting dates.
Collateral repayable on short position reverse repurchase agreements and other financial liabilities balances, including FX spots, broker
and other payables, are measured at amortised cost. The carrying value of these liabilities approximates their fair\u00a0value.
The Group's obligation under a put option contract over Proprium's non-controlling interests is measured at the present value of the redemption
amount. The valuation depends on a multiple of forecast fee earnings expected to be achieved by Proprium in 2031, as determined by a contractual
formula and up to a $375m cap. Discounting is performed at the Group\u2019s incremental borrowing rate. Significant unobservable inputs underpin the
valuation of the instrument, which has therefore been classified as Level 3 in the fair value hierarchy.
Fair value hierarchy
Total
Level 1
Level 2
Level 3
Amortised cost 1
As at 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Derivative liabilities
51,218
16
51,163
39
\u2013
Repurchase agreements
20,216
\u2013
20,216
\u2013
\u2013
Other financial liabilities
8,802
1,415
99
98
7,190
Total payables and other financial liabilities
80,236
1,431
71,478
137
7,190
Total
Level 1
Level 2
Level 3
Amortised cost 1
As at 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Derivative liabilities
57,873
522
57,318
33
\u2013
Repurchase agreements
22,117
\u2013
22,117
\u2013
\u2013
Other financial liabilities
7,372
2,797
53
\u2013
4,522
Total payables and other financial liabilities
87,362
3,319
79,488
33
4,522
1. The carrying value of payables and other financial liabilities at amortised cost approximates its fair value.
Significant transfers between levels
There have been no significant transfers of liabilities between Levels 1, 2 and 3 for the year ended 31 December 2025 (2024: no significant transfers).
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-709": { "value": "
27. Leases
(i) Group as a lessee
The Group leases offices, vehicles, IT equipment and investment properties under non-cancellable operating lease agreements. Note 12
Property, plant and equipment shows movements in right-of-use assets recognised on the Consolidated Balance Sheet within Property,
plant and equipment, broken down by class of underlying asset.
The maturity profile and movement of lease liabilities are presented in the tables below1. Lease liabilities are included within Payables and
other financial liabilities (see Note 26).
Undiscounted
lease payments
Unpaid finance
charge
Present value
Undiscounted
lease payments
Unpaid finance
charge
Present value
2025
2025
2025
2024
2024
2024
As at 31 December
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Not later than 1 year
26
(4)
22
35
(7)
28
Between 1 and 2 years
19
(3)
16
31
(5)
26
Between 2 and 3 years
8
(2)
6
23
(4)
19
Between 3 and 4 years
8
(1)
7
12
(3)
9
Between 4 and 5 years
6
(1)
5
12
(3)
9
Later than 5 years
107
(88)
19
154
(99)
55
Total lease liabilities
174
(99)
75
267
(121)
146
2025
2024
\u00a3m
\u00a3m
As at 1 January
146
174
Transfer to held for sale
(42)
\u2013
Additions
2
9
Interest expense
6
7
Lease payments
(30)
(35)
Foreign exchange rate movements
(1)
1
Disposals
(6)
(10)
Total lease liability as at 31 December
75
146
1. Includes investment property lease liability.
Depreciation and impairment of right-of-use assets are included in other expenses and interest expenses on leases are included in other
finance\u00a0costs. No other material amounts in relation to arrangements for which the Group is a lessee have been recognised in the
Consolidated Income Statement.
The remaining terms on the Group\u2019s leases range from 1 to 232 years (2024: 1 to 233 years), with approximately 2% of the leases
(2024: 2%) having extension options and 70% of these leases (2024: 79%) having termination options. Extension and termination options
are included in various leases across the Group and are used to maximise operational flexibility in terms of managing the assets used in the
Group\u2019s operations. The majority of extension and termination options held are exercisable only by the Group and not by the respective
lessor. Group has no lease contracts that contain variable payments.
At 31 December 2025 the Group had committed to a 15-year lease for a new head office building in London, which has commenced in
January 2026. Total lease commitment is \u00a3237m (2024: \u00a3237m).
(ii) Group as a lessor
Finance income for the year on finance leases and sub leases was \u00a38m (2024: \u00a311m), while income on operating leases was \u00a3449m
(2024: \u00a3439m).
The future minimum lease payments receivable under finance lease arrangement, together with the present value, are disclosed in Note
15(i). The\u00a0future undiscounted minimum lease payments receivable under operating lease arrangements are disclosed in Note 40(ii).
", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasePrepaymentsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-708": { "value": "
27. Leases
(i) Group as a lessee
The Group leases offices, vehicles, IT equipment and investment properties under non-cancellable operating lease agreements. Note 12
Property, plant and equipment shows movements in right-of-use assets recognised on the Consolidated Balance Sheet within Property,
plant and equipment, broken down by class of underlying asset.
The maturity profile and movement of lease liabilities are presented in the tables below1. Lease liabilities are included within Payables and
other financial liabilities (see Note 26).
Undiscounted
lease payments
Unpaid finance
charge
Present value
Undiscounted
lease payments
Unpaid finance
charge
Present value
2025
2025
2025
2024
2024
2024
As at 31 December
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Not later than 1 year
26
(4)
22
35
(7)
28
Between 1 and 2 years
19
(3)
16
31
(5)
26
Between 2 and 3 years
8
(2)
6
23
(4)
19
Between 3 and 4 years
8
(1)
7
12
(3)
9
Between 4 and 5 years
6
(1)
5
12
(3)
9
Later than 5 years
107
(88)
19
154
(99)
55
Total lease liabilities
174
(99)
75
267
(121)
146
2025
2024
\u00a3m
\u00a3m
As at 1 January
146
174
Transfer to held for sale
(42)
\u2013
Additions
2
9
Interest expense
6
7
Lease payments
(30)
(35)
Foreign exchange rate movements
(1)
1
Disposals
(6)
(10)
Total lease liability as at 31 December
75
146
1. Includes investment property lease liability.
Depreciation and impairment of right-of-use assets are included in other expenses and interest expenses on leases are included in other
finance\u00a0costs. No other material amounts in relation to arrangements for which the Group is a lessee have been recognised in the
Consolidated Income Statement.
The remaining terms on the Group\u2019s leases range from 1 to 232 years (2024: 1 to 233 years), with approximately 2% of the leases
(2024: 2%) having extension options and 70% of these leases (2024: 79%) having termination options. Extension and termination options
are included in various leases across the Group and are used to maximise operational flexibility in terms of managing the assets used in the
Group\u2019s operations. The majority of extension and termination options held are exercisable only by the Group and not by the respective
lessor. Group has no lease contracts that contain variable payments.
At 31 December 2025 the Group had committed to a 15-year lease for a new head office building in London, which has commenced in
January 2026. Total lease commitment is \u00a3237m (2024: \u00a3237m).
(ii) Group as a lessor
Finance income for the year on finance leases and sub leases was \u00a38m (2024: \u00a311m), while income on operating leases was \u00a3449m
(2024: \u00a3439m).
The future minimum lease payments receivable under finance lease arrangement, together with the present value, are disclosed in Note
15(i). The\u00a0future undiscounted minimum lease payments receivable under operating lease arrangements are disclosed in Note 40(ii).
", "dimensions": { "concept": "ifrs-full:DisclosureOfQuantitativeInformationAboutRightofuseAssetsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-707": { "value": "
27. Leases
(i) Group as a lessee
The Group leases offices, vehicles, IT equipment and investment properties under non-cancellable operating lease agreements. Note 12
Property, plant and equipment shows movements in right-of-use assets recognised on the Consolidated Balance Sheet within Property,
plant and equipment, broken down by class of underlying asset.
The maturity profile and movement of lease liabilities are presented in the tables below1. Lease liabilities are included within Payables and
other financial liabilities (see Note 26).
Undiscounted
lease payments
Unpaid finance
charge
Present value
Undiscounted
lease payments
Unpaid finance
charge
Present value
2025
2025
2025
2024
2024
2024
As at 31 December
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Not later than 1 year
26
(4)
22
35
(7)
28
Between 1 and 2 years
19
(3)
16
31
(5)
26
Between 2 and 3 years
8
(2)
6
23
(4)
19
Between 3 and 4 years
8
(1)
7
12
(3)
9
Between 4 and 5 years
6
(1)
5
12
(3)
9
Later than 5 years
107
(88)
19
154
(99)
55
Total lease liabilities
174
(99)
75
267
(121)
146
2025
2024
\u00a3m
\u00a3m
As at 1 January
146
174
Transfer to held for sale
(42)
\u2013
Additions
2
9
Interest expense
6
7
Lease payments
(30)
(35)
Foreign exchange rate movements
(1)
1
Disposals
(6)
(10)
Total lease liability as at 31 December
75
146
1. Includes investment property lease liability.
Depreciation and impairment of right-of-use assets are included in other expenses and interest expenses on leases are included in other
finance\u00a0costs. No other material amounts in relation to arrangements for which the Group is a lessee have been recognised in the
Consolidated Income Statement.
The remaining terms on the Group\u2019s leases range from 1 to 232 years (2024: 1 to 233 years), with approximately 2% of the leases
(2024: 2%) having extension options and 70% of these leases (2024: 79%) having termination options. Extension and termination options
are included in various leases across the Group and are used to maximise operational flexibility in terms of managing the assets used in the
Group\u2019s operations. The majority of extension and termination options held are exercisable only by the Group and not by the respective
lessor. Group has no lease contracts that contain variable payments.
At 31 December 2025 the Group had committed to a 15-year lease for a new head office building in London, which has commenced in
January 2026. Total lease commitment is \u00a3237m (2024: \u00a3237m).
(ii) Group as a lessor
Finance income for the year on finance leases and sub leases was \u00a38m (2024: \u00a311m), while income on operating leases was \u00a3449m
(2024: \u00a3439m).
The future minimum lease payments receivable under finance lease arrangement, together with the present value, are disclosed in Note
15(i). The\u00a0future undiscounted minimum lease payments receivable under operating lease arrangements are disclosed in Note 40(ii).
", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-710": { "value": "
28. Management of capital resources
Solvency II
The Group measures and monitors its capital resources in line with the UK implementation of the Solvency II requirements as set out in the
Prudential Regulation Authority (PRA) Rulebook.
The Group calculates its Solvency II capital requirements using a Partial Internal Model. The majority of the risk to which the Group is
exposed is\u00a0assessed on the Internal Model basis approved by the PRA. Capital requirements for a few smaller entities are\u00a0assessed using
the Standard Formula basis on materiality grounds. The Group\u2019s US insurance businesses and Legal & General Reinsurance Company No. 2
are valued on a local statutory basis, following the PRA\u2019s approval to use Calculation Method 2 for including these businesses in\u00a0the Group
solvency calculation.
The table below is unaudited and shows the Group Own Funds, Solvency Capital Requirement (SCR) and Surplus Own Funds, based
on the Partial\u00a0Internal Model, Matching Adjustment and Transitional Measures on Technical Provisions (TMTP) as at 31 December 2025.
As at 31 December 2025 and on the above basis, the Group had a surplus of \u00a37,007m (31 December 2024: \u00a39,012m) over its Solvency
Capital Requirement, corresponding to a Solvency II capital coverage ratio of 203% (31 December 2024: 232%). The Solvency II capital
position is as follows:
2025
2024
\u00a3m
\u00a3m
Unrestricted Tier 1 Own Funds
9,943
11,988
Restricted Tier 1 Own Funds 1
495
495
Tier 2 subordinated liabilities
3,557
3,404
Tier 2 and other eligibility restrictions
(181)
(27)
Solvency II Own Funds 2,3
13,814
15,860
Solvency Capital Requirement
(6,807)
(6,848)
Solvency II surplus
7,007
9,012
Solvency II Coverage ratio
203%
232%
1. Restricted Tier 1 Own Funds represent Perpetual restricted Tier 1 contingent convertible notes.
2. Solvency II Own Funds do not include an accrual for the final dividend of \u00a3880m (31 December 2024: final dividend of \u00a3902m) declared after balance sheet date.
3. Solvency II Own Funds allow for a risk margin of \u00a3998m (31 December 2024: \u00a31,041m) and TMTP of \u00a3536m (31 December 2024: \u00a3685m).
A reconciliation of the Group\u2019s IFRS shareholders\u2019 equity to Solvency II Own Funds is given below:
2025
2024
\u00a3m
\u00a3m
IFRS equity1
2,283
3,548
CSM net of tax2
10,486
10,287
IFRS equity plus CSM net of tax
12,769
13,835
Remove DAC, goodwill and other intangible assets and associated liabilities
(393)
(473)
Add IFRS carrying value of subordinated borrowings 3
3,744
3,788
Insurance contract valuation differences
(1,455)
(626)
Financial investments valuation differences
(1,043)
(1,118)
Difference in value of net deferred tax liabilities
379
491
Other
(6)
(10)
Tier 2 and other eligibility restrictions
(181)
(27)
Solvency II Own Funds 4,5
13,814
15,860
1. IFRS equity represents equity attributable to owners of the parent and restricted Tier 1 convertible debt note as per the Consolidated Balance Sheet.
2. CSM net of tax includes an amount related to the Non-retained US business of \u00a31,232m as at year end, which is reported on the same basis as at 31 December 2024.
3. Treated as available capital on the Solvency II balance sheet as the liabilities are subordinate to policyholder claims.
4. These balances are unaudited.
5. Solvency II Own Funds do not include an accrual for the final dividend of \u00a3880m (31 December 2024: final dividend of \u00a3902m) declared after the balance sheet\u00a0date.
Sensitivity analysis (unaudited)
The following sensitivities are provided to give an indication of how the Group\u2019s Solvency II surplus as at 31 December 2025 would have
changed in a variety of adverse events. These are all independent stresses to a single risk. In practice, the balance sheet is impacted by
combinations of stresses and the combined impact can be larger than adding together the impacts of the same stresses in isolation. It is
expected that, particularly for market risks, adverse stresses will happen together.
Impact on
net of tax
Solvency II
capital surplus
Impact on
net of tax
Solvency II
coverage ratio
Impact on
net of tax
Solvency II
capital surplus
Impact on
net of tax
Solvency II
coverage ratio
2025
2025
2024
2024
\u00a3bn
%
\u00a3bn
%
100bps increase in risk-free rates1
0.1
11
0.0
14
100bps decrease in risk-free rates1,2
(0.2)
(14)
(0.3)
(17)
Credit spreads widen by 100bps assuming an escalating addition to ratings 3,4
0.1
6
0.2
9
Credit spreads widen by 100bps assuming a flat addition to ratings3
0.2
10
0.2
13
Credit spreads narrow by 100bps assuming a flat deduction from ratings3
(0.4)
(13)
(0.6)
(18)
Credit spreads of sub investment grade assets widen by 100bps assuming a level
addition to ratings3,5
(0.1)
(2)
(0.1)
(3)
Credit migration 6
(0.5)
(7)
(0.5)
(8)
25% fall in equity markets 7
(0.5)
(5)
(0.5)
(5)
15% fall in property markets8
(0.8)
(14)
(0.8)
(10)
50bps increase in future inflation expectations
0.0
(0)
0.1
(1)
10% increase in maintenance expenses9
0.4
(5)
(0.3)
(5)
1. The previously reported 2024 interest rate sensitivities assumed post-stress rebalancing actions, which reduced the reported surplus and coverage ratio sensitivities. Applying similar
actions in 2025 would reduce the sensitivity impact by \u00a324m on surplus and 1% on the coverage ratio under the interest rate +100bps stress and by \u00a394m and 2% under the interest
rate -100bps stress. These sensitivities have been restated to exclude assumed management actions.
2. In the interest rate down stress negative rates are allowed, i.e. there is no floor at zero rates.
3. The spread sensitivity applies to the Group\u2019s corporate bond (and similar) holdings, with no change in long-term default expectations. Restructured lifetime mortgages are excluded as
the underlying exposure is mostly to property.
4. The stress for AA bonds is twice that for AAA bonds, for A bonds it is three times, for BBB four times and so on, such that the weighted average spread stress for the portfolio is 100
basis points. To give a 100bps increase on the total portfolio, the spread stress increases in steps of 32bps, i.e. 32bps for AAA, 64bps for AA etc.
5. No stress for bonds rated BBB and above. For bonds rated BB and below the stress is 100bps. The spread widening on the total portfolio is smaller than 1bps as the Group holds less
than 1% in bonds rated BB and below. The impact is primarily an increase in SCR arising from the modelled cost of trading downgraded bonds back to a higher rating in the stress
scenarios in the SCR calculation.
6. Credit migration stress covers the cost of an immediate big letter downgrade on 20% of all assets where the capital treatment depends on a credit rating (including corporate bonds and
sale and leaseback rental strips; lifetime mortgage senior notes are excluded). Downgraded assets in our annuity portfolio are assumed to be traded to their original credit rating, so the
impact is primarily a reduction in Own Funds from the loss of value on downgrade. The impact of the sensitivity will depend upon the market levels of spreads at the balance sheet date.
7. This relates primarily to equity exposure held by the Group but will also include equity-based mutual funds and other investments that receive an equity stress (for example, certain
investments in subsidiaries). Some assets have factors that increase or decrease the stress relative to general equity levels via a beta factor.
8. Assets stressed include residual values from sale and leaseback, the full amount of lifetime mortgages and direct investments treated as property.
9. A 10% increase in the assumed unit costs and future costs of investment management across all long-term insurance business lines.
The above sensitivity analysis does not reflect all management actions which could be taken to reduce the impacts. In practice, the Group
actively manages its asset and liability positions to respond to market movements. Allowance is made for the recalculation of the Loss
Absorbing Capacity of Deferred Tax for all stresses, assuming full capacity remains available post\u00a0stress.
The impacts of these stresses are not linear therefore these results should not be used to interpolate or extrapolate the impact of a smaller
or larger stress. The results of these tests are indicative of the market conditions prevailing at the balance sheet date. The results would be
different if performed at an alternative reporting date.
Capital management policies and objectives
The Group aims to manage its capital resources to maintain financial strength, policyholder security and relative external ratings advantage.
The\u00a0Group also seeks to maximise its financial flexibility by maintaining strong liquidity and by utilising a range of alternative sources of
capital including equity, senior debt, subordinated debt and reinsurance.
Capital measures
The Group measures its capital on a number of different bases, including those which comply with the regulatory frameworks within which the
Group operates and those which the directors consider most appropriate for managing the business. The measures used by the Group include:
Accounting and economic bases
Management use financial information prepared on both an IFRS and risk-based capital basis to manage capital and cash flow usage and to
determine dividend paying capacity.
The Group maintains a risk-based capital model that is used to support the management of risk within the Group. This modelling framework,
suitably adjusted for regulatory constraints, also meets the needs of the Solvency II regime.
Regulatory bases
The financial strength of the Group\u2019s insurance subsidiaries is measured under various local regulatory requirements (see\u00a0below).
Basis of regulatory capital and corresponding regulatory capital requirements
In each country in which the Group operates, the local insurance regulator specifies rules and guidance for the minimum amount and type of
capital which must be held by insurance subsidiaries in excess of their insurance liabilities. The minimum capital requirements have been
maintained at all times throughout the year. This helps to ensure that payments to policyholders can be made as they fall due.
The required capital is calculated by either assessing the additional assets which would be required to meet the insurance company\u2019s
liabilities\u00a0in\u00a0specified, stressed financial conditions, or by applying fixed percentages to the insurance company\u2019s liabilities and risk exposures.
The\u00a0requirements in the different jurisdictions in which the Group operates are detailed below:
Group regulatory basis
The Group is required to comply with the Solvency II capital requirements calculated using the Group\u2019s Partial Internal Model. The vast
majority of the risk to which the Group is exposed is assessed on the Internal Model basis approved by the PRA. The Group capital
requirements for a handful of smaller entities are assessed using the Standard Formula basis on materiality grounds. The Group\u2019s capital
requirements in respect of its US insurance businesses and Legal & General Reinsurance Company No. 2 (L&G Re 2) are valued on a local
statutory basis, following PRA approval of the Group\u2019s application to use Calculation Method 2 for including these businesses in the Group
solvency calculation.
UK regulatory basis
At the balance sheet date, required capital for the life business was based on the UK Implementation of Solvency II, as set out in the PRA
Rulebook. All material UK insurance firms, including Legal and General Assurance Society Limited and Legal and General Assurance
(Pensions Management) Limited (Asset Management\u2019s insurance subsidiary) are required to hold eligible own funds in excess of their SCR,
calculated on a Partial Internal Model basis. These firms, as well as the non-UK insurance firm (Legal & General Reinsurance Company
Limited based in Bermuda) contribute over 80% of the Group\u2019s SCR.
US regulatory basis
Required capital is determined to be the Company Action Level Risk Based Capital (RBC) based on the National Association of Insurance
Commissioners RBC model. RBC is a method of measuring the minimum amount of capital appropriate for an insurance company to support
its overall business operations, taking into account its size and risk profile. The calculation is based on applying factors to various asset,
premium, claims, expense and reserve items, with higher factors used for those items with greater underlying risk and lower factors for less
risky items.
Bermudan regulatory basis
Bermudan regulated insurers are required to hold sufficient capital to meet the Bermudan Solvency Capital Requirement (BSCR). The BSCR
model follows a Standard Formula framework; capital attributed to each risk is calculated by applying specified stresses to the assets and
liabilities. The\u00a0individual risk elements (excluding operational risk) are combined using a covariance matrix and then added to an operational
risk charge.
", "dimensions": { "concept": "legalandgeneral:DisclosureOfManagementOfCapitalResources", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-711": { "value": "880000000.0", "decimals": -6, "dimensions": { "concept": "legalandgeneral:DividendDistributionsToEquityHoldersProposedAfterTheYearEnd", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00", "unit": "iso4217:GBP" } }, "f-712": { "value": "902000000.0", "decimals": -6, "dimensions": { "concept": "legalandgeneral:DividendDistributionsToEquityHoldersProposedAfterTheYearEnd", "entity": "scheme:213800JH9QQWHLO99821", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00", "unit": "iso4217:GBP" } }, "f-713": { "value": "880000000.0", "decimals": -6, "dimensions": { "concept": "legalandgeneral:DividendDistributionsToEquityHoldersProposedAfterTheYearEnd", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00", "unit": "iso4217:GBP" } }, "f-714": { "value": "902000000.0", "decimals": -6, "dimensions": { "concept": "legalandgeneral:DividendDistributionsToEquityHoldersProposedAfterTheYearEnd", "entity": "scheme:213800JH9QQWHLO99821", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00", "unit": "iso4217:GBP" } }, "f-715": { "value": "
29. Acquisitions
On 1 October 2025 the Group acquired a 75% equity interest in Proprium Capital Partner LLC (Proprium), a global real estate investor, via
a share purchase agreement. The acquisition forms a strategic partnership with the aim to expand the Group's private markets platform.
The transaction has been accounted for as an acquisition in accordance with IFRS 3, \u2018Business Combinations\u2019. The assets and liabilities
acquired at the point of the transaction have been recorded at their fair values for the purposes of the acquisition balance sheet and included
in the consolidated financial statements using the Group\u2019s accounting policies.
The fair value of the total consideration transferred is \u00a332m. \u00a330m was paid in cash upon closing the transaction, while the remaining \u00a32m
represents the fair value of contingent consideration payable over the six years following the acquisition, subject to achieving specified
revenue targets.
The following table summarises the consideration for the acquisition, fair value of Proprium\u2019s net assets, share attributable to non-controlling
interests and resulting goodwill. No intangible assets in accordance with IAS 38 were recognised as part of the acquisition.\u00a0
2025
\u00a3m
Cash and cash equivalents
8
Receivables and other assets
4
Investments in associates and joint ventures accounted for using the equity method
1
Total assets
13
Payables and other financial liabilities
2
Fair value of net assets acquired
11
Fair value of purchase consideration
32
Non-controlling interests
3
Less: fair value of net assets acquired
(11)
Goodwill
24
Transaction costs of \u00a36m were incurred as part of the acquisition and recognised in the Consolidated Income Statement. Non-controlling
interests are measured at the proportional share of Proprium\u2019s net assets. The goodwill balance represents the expertise of the business
in developing private markets assets in Europe and Asia-Pacific. Goodwill recognised is not expected to be tax deductible.
The deal includes options for the residual 25% stake in the business, priced based on a fee-related revenue metric. The Group has a call
option exercisable from 1 July 2031 to 1 January 2032. If not exercised, non-controlling interests have a put option exercisable from 2
January 2032 to 1 July 2032. The put option has a valuation cap of $375m, while the call option is uncapped.
The call option is accounted for as a derivative (see Note 14) and mandatorily measured at fair value through profit or loss, with an
immaterial carrying value as at the acquisition date.
The put option is accounted for as a financial liability (see Note 26) and held at the present value of its expected redemption amount, which
on acquisition amounted to \u00a395m. As the option is not part of the fair value of consideration transferred, an equal and opposite deduction
from equity was recognised. Changes to the carrying value of the option are recognised directly in equity.\u00a0
As part of the agreement, certain schemes in favour of Proprium\u2019s employees and minority owners have been agreed. In particular:
\u2022 a retention scheme amounting to $11m, to be paid to non-equitised Proprium employees three years from closing
\u2022 an earnout to be paid to Proprium employees and minority owners on an annual basis over the six years following the acquisition, subject
to achieving specified revenue targets, up to a total of $67m
\u2022 an earnout to be paid to Proprium minority owners in 2029, based on the net present value of expected future carried interest from future
funds, up to $19m.
Employees and minority owners must be in service or good leavers when a payment is due in order to be able to benefit from the schemes.
The schemes are accounted for as employee benefits under IAS 19, \u2018Employee Benefits\u2019. No amounts were recognised for these schemes at
completion of the acquisition.", "dimensions": { "concept": "ifrs-full:DisclosureOfBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-718": { "value": "
30. Investment return
The Group earns an investment return from holdings in financial instruments and property investments, held to either back insurance and
investment contracts on behalf of policyholders or to deliver returns on Group capital.
Annuities
Protection
Other assets
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Dividend income
19
\u2013
4,253
4,272
Interest income on financial investments at fair value through profit or loss
2,572
\u2013
5,278
7,850
Interest income on financial investments at fair value through other comprehensive
income
84
\u2013
\u2013
84
Interest income on financial investments at amortised cost
314
\u2013
21
335
Other investment (expense)/income1
(232)
8
130
(94)
(Losses)/gains on financial investments at fair value through profit or loss2
(503)
\u2013
30,907
30,404
Gains/(losses) on derivative instruments at fair value through profit or loss2
1,583
\u2013
(55)
1,528
Financial investment return
3,837
8
40,534
44,379
Rental income
281
\u2013
324
605
Net fair value gains on properties
39
\u2013
50
89
Property investment return
320
\u2013
374
694
Investment income attributable to unit holders
\u2013
\u2013
(1,044)
(1,044)
Total investment return recognised in profit or loss
4,157
8
39,864
44,029
Net movement in financial investments designated at fair value through other
comprehensive income
(58)
\u2013
\u2013
(58)
Total investment return
4,099
8
39,864
43,971
Finance income and expense recognised in profit or loss3
Finance expense from insurance contracts issued
(3,952)
(74)
\u2013
(4,026)
Finance income from reinsurance contracts issued
226
51
\u2013
277
Total finance income and expense recognised in profit or loss
(3,726)
(23)
\u2013
(3,749)
Finance income and expense recognised in OCI 3
Finance expense from insurance contracts issued
\u2013
(159)
\u2013
(159)
Finance income from insurance contracts issued
\u2013
168
\u2013
168
Total finance income recognised in OCI
\u2013
9
\u2013
9
1. Other investment (expense)/income primarily comprises interest, gains and losses from derivative and other financial instruments.
2. Mandatorily measured at fair value through profit or loss.
3. The analysis of investment return and finance income/expense has been split between insurance contract portfolios. For annuity insurance liabilities, changes in the discount rate are
reflected in profit or loss. Assets held to back the annuity fulfilment cash flows are predominantly accounted for as FVTPL and assets attributed to annuity portfolio in excess of
fulfilment cash flows are accounted for at either amortised cost or FVOCI. Protection insurance liabilities have applied the IFRS 17 OCI option.
Annuities1
Protection1
Other assets1
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Dividend income
19
\u2013
5,081
5,100
Interest income on financial investments at fair value through profit or loss
2,503
\u2013
4,475
6,978
Interest income on financial investments at fair value through other comprehensive
income
66
\u2013
\u2013
66
Interest income on financial investments at amortised cost
284
\u2013
1
285
Other investment (expense)/income2
(480)
9
199
(272)
(Losses)/gains on financial investments at fair value through profit or loss3
(2,878)
\u2013
12,955
10,077
Losses on derivative instruments at fair value through profit or loss3
(1,178)
\u2013
(198)
(1,376)
Financial investment return
(1,664)
9
22,513
20,858
Rental income
251
\u2013
262
513
Net fair value (losses)/gains on properties
(49)
\u2013
91
42
Property investment return
202
\u2013
353
555
Total investment return recognised in profit or loss
(1,462)
9
22,866
21,413
Net movement in financial investments designated at fair value through other
comprehensive income
(246)
\u2013
\u2013
(246)
Total investment return
(1,708)
9
22,866
21,167
Finance income and expense recognised in profit or loss4
\u2013
Finance income/(expense) from insurance contracts issued
1,375
(66)
\u2013
1,309
Finance (expense)/income from reinsurance contracts issued
(124)
64
\u2013
(60)
Total finance income and expense recognised in profit or loss
1,251
(2)
\u2013
1,249
Finance income and expense recognised in OCI 4
\u2013
Finance income from insurance contracts issued
\u2013
311
\u2013
311
Finance expense from insurance contracts issued
\u2013
(195)
\u2013
(195)
Total finance income recognised in OCI
\u2013
116
\u2013
116
1. Comparative information has been re-presented to reflect the results of the US protection and US pension risk transfer (PRT) businesses as discontinued operations. See Note 1 for
further information.
2. Other investment (expense)/income primarily comprises interest, gains and losses from derivative and other financial instruments.
3. Mandatorily measured at fair value through profit or loss.
4. The analysis of investment return and finance income/expense has been split between insurance contract portfolios. For annuity insurance liabilities, changes in the discount rate are
reflected in profit or loss. Assets held to back the annuity fulfilment cash flows are predominantly accounted for as FVTPL and assets attributed to annuity portfolio in excess of
fulfilment cash flows are accounted for at either amortised cost or FVOCI. Protection insurance liabilities have applied the IFRS 17 OCI option.", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-717": { "value": "
30. Investment return
The Group earns an investment return from holdings in financial instruments and property investments, held to either back insurance and
investment contracts on behalf of policyholders or to deliver returns on Group capital.
Annuities
Protection
Other assets
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Dividend income
19
\u2013
4,253
4,272
Interest income on financial investments at fair value through profit or loss
2,572
\u2013
5,278
7,850
Interest income on financial investments at fair value through other comprehensive
income
84
\u2013
\u2013
84
Interest income on financial investments at amortised cost
314
\u2013
21
335
Other investment (expense)/income1
(232)
8
130
(94)
(Losses)/gains on financial investments at fair value through profit or loss2
(503)
\u2013
30,907
30,404
Gains/(losses) on derivative instruments at fair value through profit or loss2
1,583
\u2013
(55)
1,528
Financial investment return
3,837
8
40,534
44,379
Rental income
281
\u2013
324
605
Net fair value gains on properties
39
\u2013
50
89
Property investment return
320
\u2013
374
694
Investment income attributable to unit holders
\u2013
\u2013
(1,044)
(1,044)
Total investment return recognised in profit or loss
4,157
8
39,864
44,029
Net movement in financial investments designated at fair value through other
comprehensive income
(58)
\u2013
\u2013
(58)
Total investment return
4,099
8
39,864
43,971
Finance income and expense recognised in profit or loss3
Finance expense from insurance contracts issued
(3,952)
(74)
\u2013
(4,026)
Finance income from reinsurance contracts issued
226
51
\u2013
277
Total finance income and expense recognised in profit or loss
(3,726)
(23)
\u2013
(3,749)
Finance income and expense recognised in OCI 3
Finance expense from insurance contracts issued
\u2013
(159)
\u2013
(159)
Finance income from insurance contracts issued
\u2013
168
\u2013
168
Total finance income recognised in OCI
\u2013
9
\u2013
9
1. Other investment (expense)/income primarily comprises interest, gains and losses from derivative and other financial instruments.
2. Mandatorily measured at fair value through profit or loss.
3. The analysis of investment return and finance income/expense has been split between insurance contract portfolios. For annuity insurance liabilities, changes in the discount rate are
reflected in profit or loss. Assets held to back the annuity fulfilment cash flows are predominantly accounted for as FVTPL and assets attributed to annuity portfolio in excess of
fulfilment cash flows are accounted for at either amortised cost or FVOCI. Protection insurance liabilities have applied the IFRS 17 OCI option.
Annuities1
Protection1
Other assets1
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Dividend income
19
\u2013
5,081
5,100
Interest income on financial investments at fair value through profit or loss
2,503
\u2013
4,475
6,978
Interest income on financial investments at fair value through other comprehensive
income
66
\u2013
\u2013
66
Interest income on financial investments at amortised cost
284
\u2013
1
285
Other investment (expense)/income2
(480)
9
199
(272)
(Losses)/gains on financial investments at fair value through profit or loss3
(2,878)
\u2013
12,955
10,077
Losses on derivative instruments at fair value through profit or loss3
(1,178)
\u2013
(198)
(1,376)
Financial investment return
(1,664)
9
22,513
20,858
Rental income
251
\u2013
262
513
Net fair value (losses)/gains on properties
(49)
\u2013
91
42
Property investment return
202
\u2013
353
555
Total investment return recognised in profit or loss
(1,462)
9
22,866
21,413
Net movement in financial investments designated at fair value through other
comprehensive income
(246)
\u2013
\u2013
(246)
Total investment return
(1,708)
9
22,866
21,167
Finance income and expense recognised in profit or loss4
\u2013
Finance income/(expense) from insurance contracts issued
1,375
(66)
\u2013
1,309
Finance (expense)/income from reinsurance contracts issued
(124)
64
\u2013
(60)
Total finance income and expense recognised in profit or loss
1,251
(2)
\u2013
1,249
Finance income and expense recognised in OCI 4
\u2013
Finance income from insurance contracts issued
\u2013
311
\u2013
311
Finance expense from insurance contracts issued
\u2013
(195)
\u2013
(195)
Total finance income recognised in OCI
\u2013
116
\u2013
116
1. Comparative information has been re-presented to reflect the results of the US protection and US pension risk transfer (PRT) businesses as discontinued operations. See Note 1 for
further information.
2. Other investment (expense)/income primarily comprises interest, gains and losses from derivative and other financial instruments.
3. Mandatorily measured at fair value through profit or loss.
4. The analysis of investment return and finance income/expense has been split between insurance contract portfolios. For annuity insurance liabilities, changes in the discount rate are
reflected in profit or loss. Assets held to back the annuity fulfilment cash flows are predominantly accounted for as FVTPL and assets attributed to annuity portfolio in excess of
fulfilment cash flows are accounted for at either amortised cost or FVOCI. Protection insurance liabilities have applied the IFRS 17 OCI option.", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-716": { "value": "
30. Investment return
The Group earns an investment return from holdings in financial instruments and property investments, held to either back insurance and
investment contracts on behalf of policyholders or to deliver returns on Group capital.
Annuities
Protection
Other assets
Total
For the year ended 31 December 2025
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Dividend income
19
\u2013
4,253
4,272
Interest income on financial investments at fair value through profit or loss
2,572
\u2013
5,278
7,850
Interest income on financial investments at fair value through other comprehensive
income
84
\u2013
\u2013
84
Interest income on financial investments at amortised cost
314
\u2013
21
335
Other investment (expense)/income1
(232)
8
130
(94)
(Losses)/gains on financial investments at fair value through profit or loss2
(503)
\u2013
30,907
30,404
Gains/(losses) on derivative instruments at fair value through profit or loss2
1,583
\u2013
(55)
1,528
Financial investment return
3,837
8
40,534
44,379
Rental income
281
\u2013
324
605
Net fair value gains on properties
39
\u2013
50
89
Property investment return
320
\u2013
374
694
Investment income attributable to unit holders
\u2013
\u2013
(1,044)
(1,044)
Total investment return recognised in profit or loss
4,157
8
39,864
44,029
Net movement in financial investments designated at fair value through other
comprehensive income
(58)
\u2013
\u2013
(58)
Total investment return
4,099
8
39,864
43,971
Finance income and expense recognised in profit or loss3
Finance expense from insurance contracts issued
(3,952)
(74)
\u2013
(4,026)
Finance income from reinsurance contracts issued
226
51
\u2013
277
Total finance income and expense recognised in profit or loss
(3,726)
(23)
\u2013
(3,749)
Finance income and expense recognised in OCI 3
Finance expense from insurance contracts issued
\u2013
(159)
\u2013
(159)
Finance income from insurance contracts issued
\u2013
168
\u2013
168
Total finance income recognised in OCI
\u2013
9
\u2013
9
1. Other investment (expense)/income primarily comprises interest, gains and losses from derivative and other financial instruments.
2. Mandatorily measured at fair value through profit or loss.
3. The analysis of investment return and finance income/expense has been split between insurance contract portfolios. For annuity insurance liabilities, changes in the discount rate are
reflected in profit or loss. Assets held to back the annuity fulfilment cash flows are predominantly accounted for as FVTPL and assets attributed to annuity portfolio in excess of
fulfilment cash flows are accounted for at either amortised cost or FVOCI. Protection insurance liabilities have applied the IFRS 17 OCI option.
Annuities1
Protection1
Other assets1
Total
For the year ended 31 December 2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Dividend income
19
\u2013
5,081
5,100
Interest income on financial investments at fair value through profit or loss
2,503
\u2013
4,475
6,978
Interest income on financial investments at fair value through other comprehensive
income
66
\u2013
\u2013
66
Interest income on financial investments at amortised cost
284
\u2013
1
285
Other investment (expense)/income2
(480)
9
199
(272)
(Losses)/gains on financial investments at fair value through profit or loss3
(2,878)
\u2013
12,955
10,077
Losses on derivative instruments at fair value through profit or loss3
(1,178)
\u2013
(198)
(1,376)
Financial investment return
(1,664)
9
22,513
20,858
Rental income
251
\u2013
262
513
Net fair value (losses)/gains on properties
(49)
\u2013
91
42
Property investment return
202
\u2013
353
555
Total investment return recognised in profit or loss
(1,462)
9
22,866
21,413
Net movement in financial investments designated at fair value through other
comprehensive income
(246)
\u2013
\u2013
(246)
Total investment return
(1,708)
9
22,866
21,167
Finance income and expense recognised in profit or loss4
\u2013
Finance income/(expense) from insurance contracts issued
1,375
(66)
\u2013
1,309
Finance (expense)/income from reinsurance contracts issued
(124)
64
\u2013
(60)
Total finance income and expense recognised in profit or loss
1,251
(2)
\u2013
1,249
Finance income and expense recognised in OCI 4
\u2013
Finance income from insurance contracts issued
\u2013
311
\u2013
311
Finance expense from insurance contracts issued
\u2013
(195)
\u2013
(195)
Total finance income recognised in OCI
\u2013
116
\u2013
116
1. Comparative information has been re-presented to reflect the results of the US protection and US pension risk transfer (PRT) businesses as discontinued operations. See Note 1 for
further information.
2. Other investment (expense)/income primarily comprises interest, gains and losses from derivative and other financial instruments.
3. Mandatorily measured at fair value through profit or loss.
4. The analysis of investment return and finance income/expense has been split between insurance contract portfolios. For annuity insurance liabilities, changes in the discount rate are
reflected in profit or loss. Assets held to back the annuity fulfilment cash flows are predominantly accounted for as FVTPL and assets attributed to annuity portfolio in excess of
fulfilment cash flows are accounted for at either amortised cost or FVOCI. Protection insurance liabilities have applied the IFRS 17 OCI option.", "dimensions": { "concept": "legalandgeneral:DisclosureOfInvestmentReturn", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-719": { "value": "
31. Tax
The table below provides a summary of the standard corporate income tax rates of the main territories we operate in.
2025
2024
UK
25.0%
25.0%
USA
21.0%
21.0%
Bermuda
15.0%
0.0%
Ireland
12.5%
12.5%
The tax shown in the Consolidated Income Statement and Consolidated Statement of Comprehensive Income comprises current and
deferred tax.
(i) Implementation of the global minimum tax regime
The UK has enacted legislation with effect from 1 January 2024 to apply a global minimum tax (Pillar II) in line with the Model Rules agreed
by the Organisation for Economic Co-operation and Development (OECD). The Group has applied the temporary mandatory exception from
deferred tax accounting for the impacts of the UK top-up tax and will account for it as a current tax when it is incurred. The Group is not
expected to be subject to top-up tax in 2025.
On 15 January 2025 the OECD issued Administrative Guidance on Article 9.1 of the Global Anti-base Erosion Model Rules, which is
expected to impact how the amortisation of the \u00a3340m Bermuda deferred tax asset recognised at 31 December 2023 (carrying value of
\u00a3306m at 31 December 2025, reflecting unwind to date) is included in Pillar II top up tax calculations from 1 January 2027. We continue
to await further and substantive guidance on this matter, noting that the Administrative Guidance does not of itself change the recognition
of the Bermuda deferred tax asset. There are some outcomes where there will be a material reduction to the Bermuda deferred tax asset
and some increase in current taxes is likely. The expected outcome is an increase in the effective tax rate of the Bermuda business in certain
future years.
(ii) Tax expense in the Consolidated Income Statement
2025
2024
\u00a3m
\u00a3m
Current tax
138
252
Deferred tax
Origination or reversal of temporary differences in the year
186
96
Impact of revaluation of deferred tax balances
2
\u2013
Total deferred tax
188
96
Adjustment to equity holders' tax in respect of prior years
(1)
(1)
Total tax expense
325
347
Less: tax attributable to policyholder returns
(134)
(210)
Total tax expense attributable to equity holders
191
137
Less: tax from discontinued operations attributable to equity holders
(21)
(29)
Tax from continuing operations attributable to equity holders
170
108
The tax expense attributable to equity holders differs from the tax calculated on profit before tax at the standard UK corporation tax rate as follows:
From continuing
operations
Total1
From continuing
operations
Total1
2025
2025
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Profit before tax attributable to equity holders
690
807
238
332
Tax calculated at 25% (2024: 25%)
173
202
60
83
Adjusted for the effects of:
Recurring reconciling items:
Different rate of tax on overseas profits and losses 2
(40)
(53)
(39)
(30)
Income not subject to tax
(3)
(3)
\u2013
(3)
Non-deductible expenses 3
31
30
32
32
Differences between taxable and accounting investment gains4
(1)
(1)
32
32
Other taxes on property and foreign income
\u2013
\u2013
7
7
Unrecognised tax losses
12
14
(1)
(1)
Double tax relief
\u2013
\u2013
(1)
(1)
Non-recurring reconciling items:
Differences between taxable and accounting investment gains4
1
1
19
19
Adjustments in respect of prior years
(5)
(1)
(1)
(1)
Impact of the revaluation of deferred tax balances
2
2
\u2013
\u2013
Tax expense attributable to equity holders
170
191
108
137
Equity holders' effective tax rate
25%
24%
45%
41%
1. Total includes results from continuing and discontinued operations.
2. The lower rate of tax on overseas profits and losses is driven by Bermuda where the statutory tax rate is 15%.
3. Non-deductible expenses relate to costs which are not deductible for tax purposes including expenses in respect of acquisitions and disposals as well as certain restructuring costs.
4. Differences between taxable and accounting investment gains includes adjustments to the carrying values of investments which are not taxable.
(iii) Deferred tax \u2013 Consolidated Balance Sheet
Deferred tax assets and liabilities have been recognised/(provided) for temporary differences and unused tax losses. The recognition of deferred
tax assets in respect of temporary differences and tax losses are supported by management\u2019s best estimate of future taxable profits to absorb
the losses in future years. Deferred tax assets and liabilities presented on the Consolidated Balance Sheet have been offset to the extent it is
permissible under the relevant accounting standards. The net movement in deferred tax assets and liabilities during the year is as follows:
Net tax assets as
at 1 January 2025
Tax (charged)/
credited to the
income statement
Tax (charged)/
credited to OCI or
equity
Acquisitions/
disposals/
transfers
Net tax asset as at
31 December
2025
Deferred tax assets/(liabilities)
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Overseas deferred acquisition expenses 1
136
2
\u2013
(138)
\u2013
Difference between the tax and accounting value of insurance
contracts
617
(180)
(5)
997
1,429
UK
1,258
(135)
\u2013
\u2013
1,123
Bermuda
340
(34)
\u2013
\u2013
306
US1
(981)
(11)
(5)
997
\u2013
Realised and unrealised gains on investments
(32)
(85)
12
(50)
(155)
Excess of depreciation over capital allowance
(13)
21
\u2013
\u2013
8
Accounting provisions and other
11
56
6
(15)
58
Trading losses
825
24
\u2013
(690)
159
UK
170
(11)
\u2013
\u2013
159
US1
655
35
\u2013
(690)
\u2013
Net deferred tax asset
1,544
(162)
13
104
1,499
Presented on the Consolidated Balance Sheet as:
Deferred tax assets
1,741
(64)
6
(95)
1,588
Deferred tax liabilities
(197)
(98)
7
199
(89)
Net deferred tax asset1
1,544
(162)
13
104
1,499
Net tax assets as
at 1 January 2024
Tax (charged)/
credited to the
income statement
Tax (charged)/
credited to OCI or
equity
Acquisitions/
disposals/transfers
Net tax asset as at
31 December 2024
Deferred tax assets/(liabilities)
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Overseas deferred acquisition expenses
121
13
2
\u2013
136
Difference between the tax and accounting value of insurance
contracts
736
(315)
(41)
237
617
UK
1,149
(129)
1
237
1,258
Bermuda
340
\u2013
\u2013
\u2013
340
US
(753)
(186)
(42)
\u2013
(981)
Realised and unrealised gains on investments
72
68
65
(237)
(32)
Excess of depreciation over capital allowance
17
(28)
\u2013
(2)
(13)
Accounting provisions and other
52
(29)
(26)
14
11
Trading losses
609
205
11
\u2013
825
UK
76
94
\u2013
\u2013
170
US
533
111
11
\u2013
655
Net deferred tax asset
1,607
(86)
11
12
1,544
Presented on the Consolidated Balance Sheet as:
Deferred tax assets
1,714
15
12
\u2013
1,741
Deferred tax liabilities
(107)
(101)
(1)
12
(197)
Net deferred tax asset
1,607
(86)
11
12
1,544
1. As at 31 December 2025 balances related to the Group's US insurance entity have been classified as held for sale in the Consolidated Balance Sheet and are therefore excluded from
the closing position. The total net deferred tax liability classified as held for sale is \u00a3104m.
Unrecognised deferred tax assets
The Group has the following unrelieved tax losses and deductible temporary differences carried forward as at 31 December 2025.
No deferred tax asset has been recognised in respect of these as at 31 December 2025 (or 31 December 2024), as it is not probable
that there will be suitable taxable profits emerging in future periods against which to relieve them. These tax assets will only be
recognised if it becomes probable that suitable taxable profits will arise in future periods.
Gross
Tax
Gross
Tax
2025
2025
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Trading losses
102
19
297
67
Capital losses
83
21
166
37
Excess management expense
9
3
9
3
Unrelieved interest payments on debt instruments
16
4
14
4
Other unrecognised deferred tax
11
2
18
5
Unrecognised deferred tax assets1
221
49
504
116
1. As at 31 December 2025 balances related to the Group's US insurance entity have been classified as held for sale in the Consolidated Balance Sheet and are therefore excluded from
the closing position. There is \u00a3182m trading and capital losses included within 2024 on which deferred tax of \u00a338m was not recognised.
(iv) Current tax \u2013 Consolidated Balance Sheet
2025
2024
\u00a3m
\u00a3m
Tax recoverable within 12 months
2
38
Tax recoverable after 12 months
969
819
Current tax assets 1
971
857
1. Of the total current tax asset, \u00a3969m (2024: \u00a3819m) relates to amounts recoverable in respect of withholding tax reclaims attributable to unit linked funds.
2025
2024
\u00a3m
\u00a3m
Tax due within 12 months
57
2
Tax due after 12 months
104
116
Current tax liabilities
161
118
(v) Tax (credited)/charged directly in equity
2025
2024
\u00a3m
\u00a3m
Current tax
(7)
(7)
Deferred tax
1
(2)
Tax credit recognised directly in equity
(6)
(9)
", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-720": { "value": "
(iii) Deferred tax \u2013 Consolidated Balance Sheet
Deferred tax assets and liabilities have been recognised/(provided) for temporary differences and unused tax losses. The recognition of deferred
tax assets in respect of temporary differences and tax losses are supported by management\u2019s best estimate of future taxable profits to absorb
the losses in future years. Deferred tax assets and liabilities presented on the Consolidated Balance Sheet have been offset to the extent it is
permissible under the relevant accounting standards. The net movement in deferred tax assets and liabilities during the year is as follows:
Net tax assets as
at 1 January 2025
Tax (charged)/
credited to the
income statement
Tax (charged)/
credited to OCI or
equity
Acquisitions/
disposals/
transfers
Net tax asset as at
31 December
2025
Deferred tax assets/(liabilities)
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Overseas deferred acquisition expenses 1
136
2
\u2013
(138)
\u2013
Difference between the tax and accounting value of insurance
contracts
617
(180)
(5)
997
1,429
UK
1,258
(135)
\u2013
\u2013
1,123
Bermuda
340
(34)
\u2013
\u2013
306
US1
(981)
(11)
(5)
997
\u2013
Realised and unrealised gains on investments
(32)
(85)
12
(50)
(155)
Excess of depreciation over capital allowance
(13)
21
\u2013
\u2013
8
Accounting provisions and other
11
56
6
(15)
58
Trading losses
825
24
\u2013
(690)
159
UK
170
(11)
\u2013
\u2013
159
US1
655
35
\u2013
(690)
\u2013
Net deferred tax asset
1,544
(162)
13
104
1,499
Presented on the Consolidated Balance Sheet as:
Deferred tax assets
1,741
(64)
6
(95)
1,588
Deferred tax liabilities
(197)
(98)
7
199
(89)
Net deferred tax asset1
1,544
(162)
13
104
1,499
Net tax assets as
at 1 January 2024
Tax (charged)/
credited to the
income statement
Tax (charged)/
credited to OCI or
equity
Acquisitions/
disposals/transfers
Net tax asset as at
31 December 2024
Deferred tax assets/(liabilities)
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Overseas deferred acquisition expenses
121
13
2
\u2013
136
Difference between the tax and accounting value of insurance
contracts
736
(315)
(41)
237
617
UK
1,149
(129)
1
237
1,258
Bermuda
340
\u2013
\u2013
\u2013
340
US
(753)
(186)
(42)
\u2013
(981)
Realised and unrealised gains on investments
72
68
65
(237)
(32)
Excess of depreciation over capital allowance
17
(28)
\u2013
(2)
(13)
Accounting provisions and other
52
(29)
(26)
14
11
Trading losses
609
205
11
\u2013
825
UK
76
94
\u2013
\u2013
170
US
533
111
11
\u2013
655
Net deferred tax asset
1,607
(86)
11
12
1,544
Presented on the Consolidated Balance Sheet as:
Deferred tax assets
1,714
15
12
\u2013
1,741
Deferred tax liabilities
(107)
(101)
(1)
12
(197)
Net deferred tax asset
1,607
(86)
11
12
1,544
1. As at 31 December 2025 balances related to the Group's US insurance entity have been classified as held for sale in the Consolidated Balance Sheet and are therefore excluded from
the closing position. The total net deferred tax liability classified as held for sale is \u00a3104m.
Unrecognised deferred tax assets
The Group has the following unrelieved tax losses and deductible temporary differences carried forward as at 31 December 2025.
No deferred tax asset has been recognised in respect of these as at 31 December 2025 (or 31 December 2024), as it is not probable
that there will be suitable taxable profits emerging in future periods against which to relieve them. These tax assets will only be
recognised if it becomes probable that suitable taxable profits will arise in future periods.
Gross
Tax
Gross
Tax
2025
2025
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Trading losses
102
19
297
67
Capital losses
83
21
166
37
Excess management expense
9
3
9
3
Unrelieved interest payments on debt instruments
16
4
14
4
Other unrecognised deferred tax
11
2
18
5
Unrecognised deferred tax assets1
221
49
504
116
", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-722": { "value": "
33. Employee information
2025
2024
Monthly average number of staff employed during the year:
UK
9,739
10,512
USA1\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
1,228
1,202
Europe
71
71
Other
101
91
Worldwide employees2
11,139
11,876
2025
2024
Notes
\u00a3m
\u00a3m
Wages and salaries
917
894
Social security costs
108
105
Share-based incentive awards
34
69
70
Defined contribution pension costs
77
105
Total employee-related expenses3
1,171
1,174
1. Includes 941 employees of the business classified as held for sale (2024: 907).
2. 11,139 worldwide employees reflects average headcounts. This does not reflect Full Time Equivalents (FTEs) calculated based on the number of days worked per head.
3. Excludes \u00a3143m related to Employee-related expenses, which has been included within Profit for the year attributable to discontinued operations (2024:\u00a3135m). The comparatives for
2024 which previously included these costs have been re-presented to be on a consistent basis.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutEmployeesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-721": { "value": "
33. Employee information
2025
2024
Monthly average number of staff employed during the year:
UK
9,739
10,512
USA1\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
1,228
1,202
Europe
71
71
Other
101
91
Worldwide employees2
11,139
11,876
2025
2024
Notes
\u00a3m
\u00a3m
Wages and salaries
917
894
Social security costs
108
105
Share-based incentive awards
34
69
70
Defined contribution pension costs
77
105
Total employee-related expenses3
1,171
1,174
1. Includes 941 employees of the business classified as held for sale (2024: 907).
2. 11,139 worldwide employees reflects average headcounts. This does not reflect Full Time Equivalents (FTEs) calculated based on the number of days worked per head.
3. Excludes \u00a3143m related to Employee-related expenses, which has been included within Profit for the year attributable to discontinued operations (2024:\u00a3135m). The comparatives for
2024 which previously included these costs have been re-presented to be on a consistent basis.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-723": { "value": "
34. Share-based payments
(i) Description of plans
The Group provides a number of equity settled share-based long-term incentive plans for directors and eligible employees.
The Savings Related Share Option Plan (ShareSave) allows employees to enter into a regular savings contract over three and/or five years,
coupled\u00a0with a corresponding option over shares of the Group. The grant price is equal to 80% of the quoted market price of the Group
shares on\u00a0the invitation date.
Nil-cost options can be granted to senior managers under the Performance Share Plan (PSP), based upon individual and Company performance.
Performance conditions attached to awards before 2025 result in the number of options that vest being equally dependent on the Group\u2019s
relative total shareholder return (TSR) and earnings per share (EPS) growth (subject to Solvency II objectives). The majority of awards vest
after the end of\u00a0the three year performance period and become exercisable in thirds in year three, four and five. Awards granted to Executive
Directors and Persons Delivering Managerial Responsibilities vest after three years but any options that vest will not become exercisable
until year five. Additional performance conditions have been attached to awards from 2025 and the number of options that vest are dependent
on the Group\u2019s\u00a0relative TSR (40%), EPS (40%) and progress against published commitments in our Climate transition plan (20%).
The Share Bonus Plan (SBP) awards conditional shares, restricted shares, combined awards of CSOP options and restricted shares and
combined awards of CSOP options and nil-cost options. Recipients of restricted shares are entitled to both vote and receive dividends. Fair
value is calculated as the market value on the grant date, adjusted to reflect the eligibility for dividend payments. Conditional Share awards,
which include awards to Executive Directors, do not have voting or dividend rights.
Under the HMRC tax-advantaged Employee Share Plan (ESP), UK employees may elect to purchase Group shares from the market at the
prevailing market price on a monthly basis. The Group supplements the number of shares purchased by giving employees one free matching
share for every one share purchased up to the first \u00a320 of the employees\u2019 contributions and one free matching share for every two shares
purchased with contributions between \u00a320 and \u00a3125. There is currently no match on\u00a0contributions between \u00a3125 and \u00a3150. Both the free
and\u00a0matching shares must be held in trust for three years. The fair value of awarded shares is equal to the market value on\u00a0award date.
The weighted average fair value of ShareSave options calculated by using the Black-Scholes model were 31.3p (2024: 49.5p) and PSP
awards estimated by using Monte Carlo simulations were 176.3p (2024: 191.1p).
The fair values of the share awards made during the year have been calculated using the following assumptions:
ShareSave
PSP
ShareSave
PSP
Award date
April 2025
April 2025
April 2024
April 2024
Weighted average share price (pence)
230.6
224.2
252.7
252.7
Weighted average exercise price (pence)
193.0
N/A
196.0
N/A
Expected volatility
24.5%\u201329.1%
23.6%
25.8%\u201336.2%
26.3%
Expected life
3\u20135 years
5 years
3\u20135 years
5 years
Risk free investment rate
3.91%\u20134.10%
3.81%
3.88%\u20134.06%
4.11%
Dividend yield
9.3%
N/A
8.1%
N/A
(ii) Total recognised expense
The total recognised expense relating to share-based payments in 2025 was \u00a371m (2024: \u00a372m) before tax, all of which related to equity
settled share schemes. This is broken down between the Group\u2019s plans as detailed below:
2025
2024
\u00a3m
\u00a3m
Share bonus plan (SBP)
56
56
Performance share plan (PSP)
9
9
Employee share plan (ESP)
3
3
Savings related share option plan (ShareSave)
3
4
Total share-based payment expense
71
72
(iii) Outstanding share options
ShareSave
options
2025
Weighted
average
exercise
price
2025
p
CSOP
options
2025
Weighted
average
exercise
price
2025
p
Nil-cost
options
2025
Weighted
average
exercise
price
2025
p
Outstanding at 1 January
23,974,498
203
2,340,146
272
28,759,543
\u2013
Granted during the year
9,433,086
193
\u2013
\u2013
21,544,686
\u2013
Forfeited during the year
(2,535,484)
200
\u2013
\u2013
(8,569,235)
\u2013
Exercised during the year
(7,837,958)
204
(3,032)
272
(5,399,470)
\u2013
Expired during the year
(1,301,841)
203
(2,332,550)
272
(3,924)
\u2013
Outstanding at 31 December
21,732,301
199
4,564
289
36,331,600
\u2013
Exercisable at 31 December
592,549
200
4,564
289
1,446,503
\u2013
Weighted average remaining contractual life (years)
3
\u2013
5
ShareSave
options
2024
Weighted
average
exercise
price
2024
p
CSOP
options
2024
Weighted
average
exercise
price
2024
p
Nil-cost
options
2024
Weighted
average
exercise
price
2024
p
Outstanding at 1 January
21,803,958
210
3,649,295
280
32,406,031
\u2013
Granted during the year
9,398,286
196
\u2013
\u2013
6,607,333
\u2013
Forfeited during the year
(3,610,501)
209
\u2013
\u2013
\u2013
\u2013
Exercised during the year
(2,436,776)
222
\u2013
\u2013
(6,127,082)
\u2013
Expired during the year
(1,180,469)
213
(1,309,149)
294
(4,126,739)
\u2013
Outstanding at 31 December
23,974,498
203
2,340,146
272
28,759,543
\u2013
Exercisable at 31 December
64,104
228
\u2013
\u2013
2,094,055
\u2013
Weighted average remaining contractual life (years)
2
\u2013
4
(iv) Total options
Options over 58,068,465 shares are outstanding under ShareSave, CSOP and PSP as at 31 December 2025 (2024:\u00a055,074,187 shares).
These options have a range of exercise prices between 0p and 295p (2024: 0p and 295p) and\u00a0maximum remaining contractual life up to
2032 (2024: 2032).
", "dimensions": { "concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-727": { "value": "
35. Share capital, share premium and employee scheme treasury shares
(i) Share capital and share premium
2025
2025
2024
2024
Authorised share capital
Number of shares
\u00a3m
Number of shares
\u00a3m
At 31 December: ordinary shares of 2.5p each
9,200,000,000
230
9,200,000,000
230
Share capital
Share premium
Issued share capital, fully paid
Number of shares
\u00a3m
\u00a3m
As at 1 January 2025
5,893,179,639
147
1,036
Cancellation of shares under share buyback programme 1
(203,406,356)
(5)
\u2013
Options exercised under share option schemes
7,837,958
\u2013
16
As at 31 December 2025
5,697,611,241
142
1,052
Share capital
Share premium
Issued share capital, fully paid
Number of shares
\u00a3m
\u00a3m
As at 1 January 2024
5,979,578,280
149
1,030
Cancellation of shares under share buyback programme 1
(88,835,417)
(2)
\u2013
Options exercised under share option schemes
2,436,776
\u2013
6
As at 31 December 2024
5,893,179,639
147
1,036
1. During the year, 203,406,356 shares (2024: 88,835,417 shares) were purchased and cancelled under the share buyback programme representing 3.5% of opening issued share capital
(2024: 1.5%) at a cost of \u00a3503m (2024: \u00a3201m) including expenses.
There is one class of ordinary shares of 2.5p each. All shares issued carry equal voting rights.
The holders of the Company\u2019s ordinary shares are entitled to receive dividends as declared and are entitled to one vote per share at
shareholder meetings of the Company.
(ii) Employee share plans
The Group uses the Employees\u2019 Share Ownership Trust (ESOT) and the Legal & General Group Employee Share Plan (ESP) to purchase and
hold shares of the Group for delivery to employees under various employee share plans. Shares owned by these vehicles are included at cost
in the Consolidated Balance Sheet and are shown as a deduction from shareholders\u2019 equity. They are disclosed as employee plan shares
until they vest\u00a0to employees. Share-based liabilities to employees may also be settled via purchases directly from the market or by the
issue of new shares.
The ESOT has waived its voting rights and its rights to some of the dividends payable on the shares it holds. Employees are entitled to
dividends on the shares held on their behalf within the ESP.
2025
2025
2024
2024
Number of shares
\u00a3m
Number of shares
\u00a3m
As at 1 January
69,417,273
163
62,178,791
147
Shares purchased
8,673,843
20
14,428,772
33
Shares vested
(8,536,530)
(20)
(7,190,290)
(17)
At 31 December
69,554,586
163
69,417,273
163
", "dimensions": { "concept": "ifrs-full:DisclosureOfReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-726": { "value": "
35. Share capital, share premium and employee scheme treasury shares
(i) Share capital and share premium
2025
2025
2024
2024
Authorised share capital
Number of shares
\u00a3m
Number of shares
\u00a3m
At 31 December: ordinary shares of 2.5p each
9,200,000,000
230
9,200,000,000
230
Share capital
Share premium
Issued share capital, fully paid
Number of shares
\u00a3m
\u00a3m
As at 1 January 2025
5,893,179,639
147
1,036
Cancellation of shares under share buyback programme 1
(203,406,356)
(5)
\u2013
Options exercised under share option schemes
7,837,958
\u2013
16
As at 31 December 2025
5,697,611,241
142
1,052
Share capital
Share premium
Issued share capital, fully paid
Number of shares
\u00a3m
\u00a3m
As at 1 January 2024
5,979,578,280
149
1,030
Cancellation of shares under share buyback programme 1
(88,835,417)
(2)
\u2013
Options exercised under share option schemes
2,436,776
\u2013
6
As at 31 December 2024
5,893,179,639
147
1,036
1. During the year, 203,406,356 shares (2024: 88,835,417 shares) were purchased and cancelled under the share buyback programme representing 3.5% of opening issued share capital
(2024: 1.5%) at a cost of \u00a3503m (2024: \u00a3201m) including expenses.
There is one class of ordinary shares of 2.5p each. All shares issued carry equal voting rights.
The holders of the Company\u2019s ordinary shares are entitled to receive dividends as declared and are entitled to one vote per share at
shareholder meetings of the Company.
(ii) Employee share plans
The Group uses the Employees\u2019 Share Ownership Trust (ESOT) and the Legal & General Group Employee Share Plan (ESP) to purchase and
hold shares of the Group for delivery to employees under various employee share plans. Shares owned by these vehicles are included at cost
in the Consolidated Balance Sheet and are shown as a deduction from shareholders\u2019 equity. They are disclosed as employee plan shares
until they vest\u00a0to employees. Share-based liabilities to employees may also be settled via purchases directly from the market or by the
issue of new shares.
The ESOT has waived its voting rights and its rights to some of the dividends payable on the shares it holds. Employees are entitled to
dividends on the shares held on their behalf within the ESP.
2025
2025
2024
2024
Number of shares
\u00a3m
Number of shares
\u00a3m
As at 1 January
69,417,273
163
62,178,791
147
Shares purchased
8,673,843
20
14,428,772
33
Shares vested
(8,536,530)
(20)
(7,190,290)
(17)
At 31 December
69,554,586
163
69,417,273
163
", "dimensions": { "concept": "ifrs-full:DisclosureOfShareCapitalReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-725": { "value": "
35. Share capital, share premium and employee scheme treasury shares
(i) Share capital and share premium
2025
2025
2024
2024
Authorised share capital
Number of shares
\u00a3m
Number of shares
\u00a3m
At 31 December: ordinary shares of 2.5p each
9,200,000,000
230
9,200,000,000
230
Share capital
Share premium
Issued share capital, fully paid
Number of shares
\u00a3m
\u00a3m
As at 1 January 2025
5,893,179,639
147
1,036
Cancellation of shares under share buyback programme 1
(203,406,356)
(5)
\u2013
Options exercised under share option schemes
7,837,958
\u2013
16
As at 31 December 2025
5,697,611,241
142
1,052
Share capital
Share premium
Issued share capital, fully paid
Number of shares
\u00a3m
\u00a3m
As at 1 January 2024
5,979,578,280
149
1,030
Cancellation of shares under share buyback programme 1
(88,835,417)
(2)
\u2013
Options exercised under share option schemes
2,436,776
\u2013
6
As at 31 December 2024
5,893,179,639
147
1,036
1. During the year, 203,406,356 shares (2024: 88,835,417 shares) were purchased and cancelled under the share buyback programme representing 3.5% of opening issued share capital
(2024: 1.5%) at a cost of \u00a3503m (2024: \u00a3201m) including expenses.
There is one class of ordinary shares of 2.5p each. All shares issued carry equal voting rights.
The holders of the Company\u2019s ordinary shares are entitled to receive dividends as declared and are entitled to one vote per share at
shareholder meetings of the Company.
(ii) Employee share plans
The Group uses the Employees\u2019 Share Ownership Trust (ESOT) and the Legal & General Group Employee Share Plan (ESP) to purchase and
hold shares of the Group for delivery to employees under various employee share plans. Shares owned by these vehicles are included at cost
in the Consolidated Balance Sheet and are shown as a deduction from shareholders\u2019 equity. They are disclosed as employee plan shares
until they vest\u00a0to employees. Share-based liabilities to employees may also be settled via purchases directly from the market or by the
issue of new shares.
The ESOT has waived its voting rights and its rights to some of the dividends payable on the shares it holds. Employees are entitled to
dividends on the shares held on their behalf within the ESP.
2025
2025
2024
2024
Number of shares
\u00a3m
Number of shares
\u00a3m
As at 1 January
69,417,273
163
62,178,791
147
Shares purchased
8,673,843
20
14,428,772
33
Shares vested
(8,536,530)
(20)
(7,190,290)
(17)
At 31 December
69,554,586
163
69,417,273
163
", "dimensions": { "concept": "ifrs-full:DisclosureOfTreasurySharesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-724": { "value": "
35. Share capital, share premium and employee scheme treasury shares
(i) Share capital and share premium
2025
2025
2024
2024
Authorised share capital
Number of shares
\u00a3m
Number of shares
\u00a3m
At 31 December: ordinary shares of 2.5p each
9,200,000,000
230
9,200,000,000
230
Share capital
Share premium
Issued share capital, fully paid
Number of shares
\u00a3m
\u00a3m
As at 1 January 2025
5,893,179,639
147
1,036
Cancellation of shares under share buyback programme 1
(203,406,356)
(5)
\u2013
Options exercised under share option schemes
7,837,958
\u2013
16
As at 31 December 2025
5,697,611,241
142
1,052
Share capital
Share premium
Issued share capital, fully paid
Number of shares
\u00a3m
\u00a3m
As at 1 January 2024
5,979,578,280
149
1,030
Cancellation of shares under share buyback programme 1
(88,835,417)
(2)
\u2013
Options exercised under share option schemes
2,436,776
\u2013
6
As at 31 December 2024
5,893,179,639
147
1,036
1. During the year, 203,406,356 shares (2024: 88,835,417 shares) were purchased and cancelled under the share buyback programme representing 3.5% of opening issued share capital
(2024: 1.5%) at a cost of \u00a3503m (2024: \u00a3201m) including expenses.
There is one class of ordinary shares of 2.5p each. All shares issued carry equal voting rights.
The holders of the Company\u2019s ordinary shares are entitled to receive dividends as declared and are entitled to one vote per share at
shareholder meetings of the Company.
(ii) Employee share plans
The Group uses the Employees\u2019 Share Ownership Trust (ESOT) and the Legal & General Group Employee Share Plan (ESP) to purchase and
hold shares of the Group for delivery to employees under various employee share plans. Shares owned by these vehicles are included at cost
in the Consolidated Balance Sheet and are shown as a deduction from shareholders\u2019 equity. They are disclosed as employee plan shares
until they vest\u00a0to employees. Share-based liabilities to employees may also be settled via purchases directly from the market or by the
issue of new shares.
The ESOT has waived its voting rights and its rights to some of the dividends payable on the shares it holds. Employees are entitled to
dividends on the shares held on their behalf within the ESP.
2025
2025
2024
2024
Number of shares
\u00a3m
Number of shares
\u00a3m
As at 1 January
69,417,273
163
62,178,791
147
Shares purchased
8,673,843
20
14,428,772
33
Shares vested
(8,536,530)
(20)
(7,190,290)
(17)
At 31 December
69,554,586
163
69,417,273
163
", "dimensions": { "concept": "ifrs-full:DisclosureOfIssuedCapitalExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-728": { "value": "
36. Restricted Tier 1 convertible notes
On 24 June 2020, Legal & General Group Plc issued \u00a3500m of 5.625% perpetual restricted Tier 1 contingent convertible notes. The notes
are callable at par between 24 March 2031 and 24 September 2031 (the First Reset Date) inclusive and every 5 years after the First Reset
Date. If not called, the coupon from 24 September 2031 will be reset to the prevailing five year benchmark gilt yield plus 5.378%.
The notes have no fixed maturity date. Optional cancellation of coupon payments is at the discretion of the issuer and mandatory cancellation is
upon the occurrence of certain conditions. The Tier 1 notes are therefore treated as equity and coupon payments are recognised directly in equity
when paid. During the year, coupon payments of \u00a328m were made (2024: \u00a328m). The notes rank junior to all other liabilities and senior to
equity attributable to owners of the parent. On the occurrence of certain conversion trigger events the notes are convertible into ordinary shares
of the issuer at the prevailing conversion price.
The notes are treated as restricted Tier 1 Own Funds for Solvency II purposes.
", "dimensions": { "concept": "legalandgeneral:DisclosureOfRestrictedTier1ConvertibleNotes", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-730": { "value": "
37. Other liabilities
2025
2024
\u00a3m
\u00a3m
Accruals
506
597
Deferred income
10
12
Other
337
341
Total other liabilities
853
950
Due within 12 months
834
922
Due after 12 months
19
28
", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredIncomeExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-729": { "value": "
37. Other liabilities
2025
2024
\u00a3m
\u00a3m
Accruals
506
597
Deferred income
10
12
Other
337
341
Total other liabilities
853
950
Due within 12 months
834
922
Due after 12 months
19
28
", "dimensions": { "concept": "ifrs-full:DisclosureOfAccruedExpensesAndOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-732": { "value": "
38. Related party transactions
(i) Key management personnel transactions and compensation
There were no material transactions between key management and the L&G group of companies during the year. All transactions between
the\u00a0Group and its key management are on commercial terms which are no more favourable than those available to employees in general.
Contributions to the post-employment defined benefit plans were \u00a35m (31 December 2024: \u00a3 7m) for all employees.
At 31 December 2025 and 31 December 2024 there were no loans outstanding to officers of the Company.
The aggregate compensation for key management personnel, including executive directors, non-executive directors and the members of the
Group Management Committee is as follows:
2025
2024
\u00a3m
\u00a3m
Salaries
17
14
Share-based incentive awards
14
10
Key management personnel compensation
31
24
(ii) Services provided to and by related parties
All transactions between the Group and associates, joint ventures and other related parties during the year are on commercial terms which
are no more favourable than those available to companies in general.
Loans and commitments to related parties are made in the normal course of business. As at 31 December 2025, the Group had:
\u2022 loans outstanding from related parties of \u00a3116m (2024: \u00a321m), with a further commitment of \u00a3nil (2024: \u00a38m)
\u2022 total other commitments of \u00a3295m to related parties (2024: \u00a31,547m), of which \u00a3245m has been drawn (2024: \u00a31,264m).
", "dimensions": { "concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-731": { "value": "
38. Related party transactions
(i) Key management personnel transactions and compensation
There were no material transactions between key management and the L&G group of companies during the year. All transactions between
the\u00a0Group and its key management are on commercial terms which are no more favourable than those available to employees in general.
Contributions to the post-employment defined benefit plans were \u00a35m (31 December 2024: \u00a3 7m) for all employees.
At 31 December 2025 and 31 December 2024 there were no loans outstanding to officers of the Company.
The aggregate compensation for key management personnel, including executive directors, non-executive directors and the members of the
Group Management Committee is as follows:
2025
2024
\u00a3m
\u00a3m
Salaries
17
14
Share-based incentive awards
14
10
Key management personnel compensation
31
24
(ii) Services provided to and by related parties
All transactions between the Group and associates, joint ventures and other related parties during the year are on commercial terms which
are no more favourable than those available to companies in general.
Loans and commitments to related parties are made in the normal course of business. As at 31 December 2025, the Group had:
\u2022 loans outstanding from related parties of \u00a3116m (2024: \u00a321m), with a further commitment of \u00a3nil (2024: \u00a38m)
\u2022 total other commitments of \u00a3295m to related parties (2024: \u00a31,547m), of which \u00a3245m has been drawn (2024: \u00a31,264m).
", "dimensions": { "concept": "ifrs-full:DisclosureOfTransactionsBetweenRelatedPartiesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-733": { "value": "
(i) Key management personnel transactions and compensation
There were no material transactions between key management and the L&G group of companies during the year. All transactions between
the\u00a0Group and its key management are on commercial terms which are no more favourable than those available to employees in general.
Contributions to the post-employment defined benefit plans were \u00a35m (31 December 2024: \u00a3 7m) for all employees.
At 31 December 2025 and 31 December 2024 there were no loans outstanding to officers of the Company.
The aggregate compensation for key management personnel, including executive directors, non-executive directors and the members of the
Group Management Committee is as follows:
2025
2024
\u00a3m
\u00a3m
Salaries
17
14
Share-based incentive awards
14
10
Key management personnel compensation
31
24
", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutKeyManagementPersonnelExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-735": { "value": "
39. Contingent liabilities, guarantees and indemnities
Provision for the liabilities arising under contracts with policyholders is based on certain assumptions. The variance between actual
experience from that assumed may result in those liabilities differing from the provisions made for them. Liabilities may also arise in
respect of claims relating to the interpretation of policyholder contracts, or the circumstances in which policyholders have entered into
them. The extent of these liabilities is influenced by a number of factors including the actions and requirements of the PRA, FCA,
ombudsman rulings, industry compensation schemes and court judgments.
Various Group companies receive claims and become involved in actual or threatened litigation and regulatory issues from time to time.
The relevant members of the Group ensure that they make prudent provision as and when circumstances calling for such provision become
clear and that each has adequate capital and reserves to meet reasonably foreseeable eventualities. The provisions made are regularly
reviewed. It is not possible to predict, with certainty, the extent and the timing of the financial impact of these claims, litigation or issues.
Group companies have given warranties, indemnities and guarantees as a normal part of their business and operating activities or in relation
to capital market transactions or corporate disposals. Legal & General Group Plc has provided indemnities and guarantees in respect of the
liabilities of Group companies in support of their business activities. Legal and General Assurance Society Limited has provided indemnities,
a liquidity and expense risk agreement, a deed of support and a cash and securities liquidity facility in respect of the liabilities of Group
companies to facilitate the Group\u2019s matching adjustment reorganisation pursuant to Solvency II.
40. Commitments
(i) Capital commitments
2025
2024
\u00a3m
\u00a3m
Authorised and contracted commitments not provided for in respect of investment property development, payable after 31 December:
Long term business
178
323
(ii) Lease commitment receivable \u2013 payments to be received under operating leases
Where the Group is a lessor, the future undiscounted minimum lease payments under operating lease arrangements are disclosed below:
Total future
payments
Total future
payments
2025
2024
\u00a3m
\u00a3m
Not later than 1 year
501
429
Between 1 and 2 years
457
406
Between 2 and 3 years
435
383
Between 3 and 4 years
414
367
Between 4 and 5 years
392
352
Later than 5 years
4,225
3,917
Total lease commitment receivable
6,424
5,854
Lease commitments payable are disclosed as part of the leases disclosure in Note 27.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsAndContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-734": { "value": "
39. Contingent liabilities, guarantees and indemnities
Provision for the liabilities arising under contracts with policyholders is based on certain assumptions. The variance between actual
experience from that assumed may result in those liabilities differing from the provisions made for them. Liabilities may also arise in
respect of claims relating to the interpretation of policyholder contracts, or the circumstances in which policyholders have entered into
them. The extent of these liabilities is influenced by a number of factors including the actions and requirements of the PRA, FCA,
ombudsman rulings, industry compensation schemes and court judgments.
Various Group companies receive claims and become involved in actual or threatened litigation and regulatory issues from time to time.
The relevant members of the Group ensure that they make prudent provision as and when circumstances calling for such provision become
clear and that each has adequate capital and reserves to meet reasonably foreseeable eventualities. The provisions made are regularly
reviewed. It is not possible to predict, with certainty, the extent and the timing of the financial impact of these claims, litigation or issues.
Group companies have given warranties, indemnities and guarantees as a normal part of their business and operating activities or in relation
to capital market transactions or corporate disposals. Legal & General Group Plc has provided indemnities and guarantees in respect of the
liabilities of Group companies in support of their business activities. Legal and General Assurance Society Limited has provided indemnities,
a liquidity and expense risk agreement, a deed of support and a cash and securities liquidity facility in respect of the liabilities of Group
companies to facilitate the Group\u2019s matching adjustment reorganisation pursuant to Solvency II.
", "dimensions": { "concept": "ifrs-full:DisclosureOfContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-736": { "value": "
40. Commitments
(i) Capital commitments
2025
2024
\u00a3m
\u00a3m
Authorised and contracted commitments not provided for in respect of investment property development, payable after 31 December:
Long term business
178
323
(ii) Lease commitment receivable \u2013 payments to be received under operating leases
Where the Group is a lessor, the future undiscounted minimum lease payments under operating lease arrangements are disclosed below:
Total future
payments
Total future
payments
2025
2024
\u00a3m
\u00a3m
Not later than 1 year
501
429
Between 1 and 2 years
457
406
Between 2 and 3 years
435
383
Between 3 and 4 years
414
367
Between 4 and 5 years
392
352
Later than 5 years
4,225
3,917
Total lease commitment receivable
6,424
5,854
Lease commitments payable are disclosed as part of the leases disclosure in Note 27.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-741": { "value": "
41. Associates and joint ventures
Summarised financial information for associates and joint ventures accounted for under the equity method is shown below:
Associates
Joint ventures
Associates
Joint ventures
2025
2025
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Current assets
110
67
83
428
Non-current assets
2,204
415
1,722
740
Current liabilities
(34)
(30)
(61)
(143)
Non-current liabilities
(1,654)
\u2013
(1,056)
\u2013
Loss from continuing operations - total
(56)
(39)
(95)
(27)
Loss from continuing operations - Group's share
(24)
(20)
(40)
(14)
Total comprehensive expense - total
(56)
(42)
(95)
(27)
Total comprehensive expense - Group's share
(24)
(21)
(40)
(14)
The associates and joint ventures have no significant contingent liabilities to which the Group is exposed. The Group has no commitments to
provide funding to associates and joint ventures other than the ones included in Note 40.
During the year, the total value of Investment in associates and joint ventures accounted for using the equity method on the Group\u2019s
Consolidated Balance Sheet increased to \u00a3510m (2024: \u00a3872m), reflecting a number of additions and disposals, as well as the Group\u2019s
share of the profits and losses of the respective associates and joint ventures. The Group's share of profits or losses on associates and joint
ventures is disclosed in Other operational income on the Consolidated Income Statement.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-740": { "value": "
41. Associates and joint ventures
Summarised financial information for associates and joint ventures accounted for under the equity method is shown below:
Associates
Joint ventures
Associates
Joint ventures
2025
2025
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Current assets
110
67
83
428
Non-current assets
2,204
415
1,722
740
Current liabilities
(34)
(30)
(61)
(143)
Non-current liabilities
(1,654)
\u2013
(1,056)
\u2013
Loss from continuing operations - total
(56)
(39)
(95)
(27)
Loss from continuing operations - Group's share
(24)
(20)
(40)
(14)
Total comprehensive expense - total
(56)
(42)
(95)
(27)
Total comprehensive expense - Group's share
(24)
(21)
(40)
(14)
The associates and joint ventures have no significant contingent liabilities to which the Group is exposed. The Group has no commitments to
provide funding to associates and joint ventures other than the ones included in Note 40.
During the year, the total value of Investment in associates and joint ventures accounted for using the equity method on the Group\u2019s
Consolidated Balance Sheet increased to \u00a3510m (2024: \u00a3872m), reflecting a number of additions and disposals, as well as the Group\u2019s
share of the profits and losses of the respective associates and joint ventures. The Group's share of profits or losses on associates and joint
ventures is disclosed in Other operational income on the Consolidated Income Statement.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-739": { "value": "
41. Associates and joint ventures
Summarised financial information for associates and joint ventures accounted for under the equity method is shown below:
Associates
Joint ventures
Associates
Joint ventures
2025
2025
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Current assets
110
67
83
428
Non-current assets
2,204
415
1,722
740
Current liabilities
(34)
(30)
(61)
(143)
Non-current liabilities
(1,654)
\u2013
(1,056)
\u2013
Loss from continuing operations - total
(56)
(39)
(95)
(27)
Loss from continuing operations - Group's share
(24)
(20)
(40)
(14)
Total comprehensive expense - total
(56)
(42)
(95)
(27)
Total comprehensive expense - Group's share
(24)
(21)
(40)
(14)
The associates and joint ventures have no significant contingent liabilities to which the Group is exposed. The Group has no commitments to
provide funding to associates and joint ventures other than the ones included in Note 40.
During the year, the total value of Investment in associates and joint ventures accounted for using the equity method on the Group\u2019s
Consolidated Balance Sheet increased to \u00a3510m (2024: \u00a3872m), reflecting a number of additions and disposals, as well as the Group\u2019s
share of the profits and losses of the respective associates and joint ventures. The Group's share of profits or losses on associates and joint
ventures is disclosed in Other operational income on the Consolidated Income Statement.
(ii) Associates and joint ventures
The Group has the following significant holdings classified as associates and joint ventures which have been included as financial
investments and investments in associates and joint ventures accounted for using the equity method. The gross assets of these
companies are in part funded by borrowings which are non-recourse to the Group.
Company name
Country of incorporation
Accounting treatment
Investment type
Share class
% of equity
shares held by
Group
245 Hammersmith Road (General Partner) Limited
England and Wales
FVTPL
Joint Venture
Partnership
50.0
245 Hammersmith Road Limited Partnership
England and Wales
FVTPL
Joint Venture
Partnership
50.0
245 HR GP LLP
England and Wales
FVTPL
Joint Venture
Partnership
50.0
Access Development II Limited Partnership
Jersey
Equity Method
Joint Venture
Ordinary
50.0
Access Development Limited Partnership
Jersey
Equity Method
Joint Venture
Ordinary
50.0
Bruntwood Science Management Services Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Bruntwood SciTech Limited
England and Wales
Equity Method
Associate
Ordinary
43.9
ECF (General Partner) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
33.3
English Cities Fund
England and Wales
FVTPL
Associate
Partnership
35.4
Gravesend Coldharbour Road Management Company Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Household Capital Pty Limited
Australia
Equity Method
Associate
Ordinary
38.1
Imagine Mortgages Limited (Generation Home)
England and Wales
FVTPL
Associate
Ordinary
39.5
ImpactA Global Holding Limited
England and Wales
Equity Method
Associate
Ordinary
40.0
Kensa Group Limited
England and Wales
FVTPL
Associate
Ordinary
37.0
MoneyHub Financial Technology Limited
England and Wales
FVTPL
Associate
Ordinary
12.6
Newcastle Helix Developments LLP
England and Wales
FVTPL
Associate
Ordinary
33.0
Nomura Herne Hill
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
NTR Asset Management Europe DAC
Ireland
Equity Method
Associate
Ordinary
25.0
Oxford University Property Development Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Pemberton Asset Management Holdings Limited
Jersey
FVTPL
Associate
Ordinary
40.0
Proprium Capital Partners (Australia) Pty Ltd
Australia
Equity Method
Joint Venture
Ordinary
37.5
Salary Direct Holdings Limited
Jersey
FVTPL
Associate
Ordinary
53.5
Senior Living (Comberton) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Senior Living (Farnhams) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Senior Living (Freelands) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Senior Living (Hemel Hempstead) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Senior Living (Matchams) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Senior Living (Sunbury-on-Thames) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Senior Living (Walkern) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Sennen Finance Designated Activity Company
Ireland
Equity Method
Joint Venture
N/A
0.0
Sero Technologies Limited
England and Wales
FVTPL
Associate
Ordinary
21.5
Smartr365 Finance Limited
England and Wales
FVTPL
Associate
Ordinary
40.4
SOJV LLP
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Techficient Holdings LLC
USA
Equity Method
Associate
N/A
45.0
", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInAssociatesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-738": { "value": "
41. Associates and joint ventures
Summarised financial information for associates and joint ventures accounted for under the equity method is shown below:
Associates
Joint ventures
Associates
Joint ventures
2025
2025
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Current assets
110
67
83
428
Non-current assets
2,204
415
1,722
740
Current liabilities
(34)
(30)
(61)
(143)
Non-current liabilities
(1,654)
\u2013
(1,056)
\u2013
Loss from continuing operations - total
(56)
(39)
(95)
(27)
Loss from continuing operations - Group's share
(24)
(20)
(40)
(14)
Total comprehensive expense - total
(56)
(42)
(95)
(27)
Total comprehensive expense - Group's share
(24)
(21)
(40)
(14)
The associates and joint ventures have no significant contingent liabilities to which the Group is exposed. The Group has no commitments to
provide funding to associates and joint ventures other than the ones included in Note 40.
During the year, the total value of Investment in associates and joint ventures accounted for using the equity method on the Group\u2019s
Consolidated Balance Sheet increased to \u00a3510m (2024: \u00a3872m), reflecting a number of additions and disposals, as well as the Group\u2019s
share of the profits and losses of the respective associates and joint ventures. The Group's share of profits or losses on associates and joint
ventures is disclosed in Other operational income on the Consolidated Income Statement.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-737": { "value": "
41. Associates and joint ventures
Summarised financial information for associates and joint ventures accounted for under the equity method is shown below:
Associates
Joint ventures
Associates
Joint ventures
2025
2025
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Current assets
110
67
83
428
Non-current assets
2,204
415
1,722
740
Current liabilities
(34)
(30)
(61)
(143)
Non-current liabilities
(1,654)
\u2013
(1,056)
\u2013
Loss from continuing operations - total
(56)
(39)
(95)
(27)
Loss from continuing operations - Group's share
(24)
(20)
(40)
(14)
Total comprehensive expense - total
(56)
(42)
(95)
(27)
Total comprehensive expense - Group's share
(24)
(21)
(40)
(14)
The associates and joint ventures have no significant contingent liabilities to which the Group is exposed. The Group has no commitments to
provide funding to associates and joint ventures other than the ones included in Note 40.
During the year, the total value of Investment in associates and joint ventures accounted for using the equity method on the Group\u2019s
Consolidated Balance Sheet increased to \u00a3510m (2024: \u00a3872m), reflecting a number of additions and disposals, as well as the Group\u2019s
share of the profits and losses of the respective associates and joint ventures. The Group's share of profits or losses on associates and joint
ventures is disclosed in Other operational income on the Consolidated Income Statement.
(ii) Associates and joint ventures
The Group has the following significant holdings classified as associates and joint ventures which have been included as financial
investments and investments in associates and joint ventures accounted for using the equity method. The gross assets of these
companies are in part funded by borrowings which are non-recourse to the Group.
Company name
Country of incorporation
Accounting treatment
Investment type
Share class
% of equity
shares held by
Group
245 Hammersmith Road (General Partner) Limited
England and Wales
FVTPL
Joint Venture
Partnership
50.0
245 Hammersmith Road Limited Partnership
England and Wales
FVTPL
Joint Venture
Partnership
50.0
245 HR GP LLP
England and Wales
FVTPL
Joint Venture
Partnership
50.0
Access Development II Limited Partnership
Jersey
Equity Method
Joint Venture
Ordinary
50.0
Access Development Limited Partnership
Jersey
Equity Method
Joint Venture
Ordinary
50.0
Bruntwood Science Management Services Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Bruntwood SciTech Limited
England and Wales
Equity Method
Associate
Ordinary
43.9
ECF (General Partner) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
33.3
English Cities Fund
England and Wales
FVTPL
Associate
Partnership
35.4
Gravesend Coldharbour Road Management Company Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Household Capital Pty Limited
Australia
Equity Method
Associate
Ordinary
38.1
Imagine Mortgages Limited (Generation Home)
England and Wales
FVTPL
Associate
Ordinary
39.5
ImpactA Global Holding Limited
England and Wales
Equity Method
Associate
Ordinary
40.0
Kensa Group Limited
England and Wales
FVTPL
Associate
Ordinary
37.0
MoneyHub Financial Technology Limited
England and Wales
FVTPL
Associate
Ordinary
12.6
Newcastle Helix Developments LLP
England and Wales
FVTPL
Associate
Ordinary
33.0
Nomura Herne Hill
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
NTR Asset Management Europe DAC
Ireland
Equity Method
Associate
Ordinary
25.0
Oxford University Property Development Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Pemberton Asset Management Holdings Limited
Jersey
FVTPL
Associate
Ordinary
40.0
Proprium Capital Partners (Australia) Pty Ltd
Australia
Equity Method
Joint Venture
Ordinary
37.5
Salary Direct Holdings Limited
Jersey
FVTPL
Associate
Ordinary
53.5
Senior Living (Comberton) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Senior Living (Farnhams) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Senior Living (Freelands) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Senior Living (Hemel Hempstead) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Senior Living (Matchams) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Senior Living (Sunbury-on-Thames) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Senior Living (Walkern) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Sennen Finance Designated Activity Company
Ireland
Equity Method
Joint Venture
N/A
0.0
Sero Technologies Limited
England and Wales
FVTPL
Associate
Ordinary
21.5
Smartr365 Finance Limited
England and Wales
FVTPL
Associate
Ordinary
40.4
SOJV LLP
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Techficient Holdings LLC
USA
Equity Method
Associate
N/A
45.0
", "dimensions": { "concept": "ifrs-full:DisclosureOfJointVenturesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-742": { "value": "510000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:InvestmentAccountedForUsingEquityMethod", "entity": "scheme:213800JH9QQWHLO99821", "period": "2026-01-01T00:00:00", "unit": "iso4217:GBP" } }, "f-743": { "value": "872000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:InvestmentAccountedForUsingEquityMethod", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00", "unit": "iso4217:GBP" } }, "f-744": { "value": "
42. Related undertakings
The Companies Act 2006 requires disclosure of information about the Group\u2019s subsidiaries, associates, joint ventures and other significant
holdings. Significant holdings are entities in which the Group either has a shareholding greater than or equal to 20% of the nominal value of
any\u00a0share class, or a book value greater than 20% of the Group\u2019s assets.
(i) Subsidiaries
The particulars of the Company\u2019s subsidiaries, mutual funds and partnerships that have been consolidated as at 31 December 2025 are
listed below, grouped by country of incorporation and registered office address. The main territory of operation of subsidiaries incorporated in
England and Wales is the UK. For overseas subsidiaries the principal country of operation is the same as the country of incorporation. All
subsidiaries are 100% owned, unless stated otherwise. All subsidiaries are held through intermediate holding companies unless noted that
they are held directly by the Company (marked with #). Subsidiaries that are consolidated where the Group owns less than 50% of the
ordinary share capital, are consolidated based on an assessment of\u00a0control normally arising from special rights attaching to the class of share
owned, other contractual arrangements and factors such as the purpose of the investee, the nature of its relevant activities, voting rights
(including potential voting rights) and substantive and protective rights.
The Group reassesses the appropriateness of the consolidation of an investee whenever facts and circumstances indicate that there has been
a\u00a0change in the relationship between the Group and the investee which affects control.
Company name
Share class
% of equity
shares held
by the Group
England and Wales
One Coleman Street, London, EC2R 5AA
30-31 Golden Square GP LLP
Partnership
100.0
30-31 Golden Square LP
Partnership
100.0
30-31 Golden Square Nominee 1 Limited
Ordinary
100.0
30-31 Golden Square Nominee 2 Limited
Ordinary
100.0
30-31 Golden Square Unit Trust
Unit
100.0
Antham 1 Limited
Ordinary
100.0
Begbroke Oxford Limited
Ordinary
100.0
Bonnington Residents Management Company
Limited
Limited by
guarantee
100.0
BQN Limited
Ordinary
100.0
Capital Hill Limited Partnership
Partnership
99.7
Cardiff Interchange Limited
Ordinary
100.0
Cardiff Interchange NomineeCo Limited
Ordinary
100.0
Court Place Gardens Holdings LLP
Partnership
100.0
Court Place Gardens Oxford Limited
Ordinary
100.0
Finovation UK Limited
Ordinary
100.0
Halesworth Lanecroft Partners GP LLP
Partnership
100.0
Halesworth Lanecroft Partners LP
Partnership
100.0
Haut Investments 2 Limited
Ordinary
100.0
Haut Investments Limited
Ordinary
100.0
Interchange Central Square (General Partner)
Limited
Ordinary
100.0
Interchange Central Square Limited Partnership
Partnership
100.0
Investment Discounts On Line Limited
Ordinary
100.0
IPIF Trade General Partner Limited
Ordinary
100.0
IPIF Trade Nominee Limited
Ordinary
100.0
IXDS Limited
Ordinary
70.0
L&G - Asset Management Limited#
Ordinary
100.0
L&G Affordable Housing Access GP Limited
Ordinary
100.0
L&G Affordable Housing Access LGPS LP
Partnership
100.0
L&G Affordable Housing GP Limited
Ordinary
100.0
L&G Affordable Housing LP
Partnership
100.0
Company name
Share class
% of equity
shares held
by the Group
L&G Affordable Housing Northern GP Limited
Ordinary
100.0
L&G Affordable Housing Northern LGPS LP
Ordinary
100.0
L&G Annuity S&L GP Limited
Ordinary
100.0
L&G Buy & Maintain Short Dated Credit Fund
Ordinary
100.0
L&G Cash Trust
Unit
38.5
L&G Coleman Holdco Ltd
Ordinary
100.0
L&G Digital Infrastructure Co-Invest Holding 1 Ltd
Ordinary
100.0
L&G Digital Infrastructure Co-Invest Holding 2 Ltd
Ordinary
100.0
L&G Digital Infrastructure Holding 2 Ltd
Ordinary
100.0
L&G Digital Infrastructure Holding Ltd
Ordinary
100.0
L&G Future World Global Opportunities Fund
Unit
33.7
L&G Healthcare Plan Trustee Limited
Ordinary
100.0
L&G Herne Hill Holdco GP LLP
Partnership
100.0
L&G Herne Hill Holdco Nominee Limited
Ordinary
100.0
L&G Hillview Place Propco Limited
Ordinary
100.0
L&G Hotel Edinburgh Propco Limited
Ordinary
100.0
L&G Hotel Leeds Propco Limited
Ordinary
100.0
L&G Kao Holdco Ltd
Ordinary
100.0
L&G Lower Gilmore Place Propco Ltd
Ordinary
100.0
L&G Managed Fund Property Unit Trust
Unit
99.9
L&G Multi Asset Core 20 Fund
Unit
83.0
L&G Multi Asset Core 45 Fund
Unit
48.5
L&G Multi Asset Core 75 Fund
Unit
53.2
L&G Multi-Asset Target Return Fund
Unit
47.5
L&G Multifamily LLP
Partnership
100.0
L&G Nature Investments Limited
Ordinary
100.0
L&G Property Europe Limited
Ordinary
100.0
L&G UK Smaller Companies Trust
Unit
33.1
Lanecroft Homes Limited
Ordinary
100.0
Legal & General (Portfolio Management
Services) Limited
Ordinary
100.0
Legal & General (Portfolio Management
Services) Nominees Limited
Ordinary
100.0
Legal & General (Strategic Land Harpenden)
Limited
Ordinary
100.0
Company name
Share class
% of equity
shares held
by the Group
Legal & General (Strategic Land North
Horsham) Limited
Ordinary
100.0
Legal & General (Strategic Land) Limited
Ordinary
100.0
Legal & General (Unit Trust Managers) Limited
Ordinary
100.0
Legal & General (Unit Trust Managers)
Nominees Limited
Ordinary
100.0
Legal & General Affordable Homes (AR) LLP
Partnership
100.0
Legal & General Affordable Homes
(Development 2) Limited
Ordinary
100.0
Legal & General Affordable Homes
(Development) Limited
Ordinary
100.0
Legal & General Affordable Homes (Investment
1) Limited
Ordinary
100.0
Legal & General Affordable Homes (Investment
2) Limited
Ordinary
100.0
Legal & General Affordable Homes (Investment
3) Limited
Ordinary
100.0
Legal & General Affordable Homes
(Operations) Limited
Ordinary
100.0
Legal & General Affordable Homes (SO) LLP
Partnership
100.0
Legal & General Affordable Homes Limited
Ordinary
100.0
Legal & General Bristol Temple Island Estate
Management Company Limited
Ordinary
100.0
Legal & General Capital Investments Limited#
Ordinary
100.0
Legal & General Co Sec Limited#
Ordinary
100.0
Legal & General Development Assets Holdings
Limited
Ordinary
100.0
Legal & General Digital Solutions Limited
Ordinary
100.0
Legal & General Employee Benefits
Administration Limited
Ordinary
100.0
Legal & General Estate Agencies Limited #
Ordinary
100.0
Legal & General Euro Mortgage No.1 SPV
Limited
Ordinary
100.0
Legal & General Euro Mortgage SPV LLP
Partnership
100.0
Legal & General Everest UK Holdco Limited
Ordinary
100.0
Legal & General Finance PLC#
Ordinary
100.0
Legal & General Financial Advice Limited
Ordinary
100.0
Legal & General FX Structuring (SPV) Limited
Ordinary
100.0
Legal & General GP LLP
Partnership
100.0
Legal & General Heat Pumps Limited
Ordinary
100.0
Legal & General Home Finance Holding
Company Limited
Ordinary
100.0
Legal & General Home Finance Limited
Ordinary
100.0
Legal & General Homes (Services Co) Limited
Ordinary
100.0
Legal & General Homes Holdings Limited
Ordinary
100.0
Legal & General Homes Modular Limited
Ordinary
100.0
Legal & General Insurance Holdings Limited
Ordinary
100.0
Legal & General Insurance Holdings No. 2
Limited#
Ordinary
100.0
Legal & General Investment Management
Limited
Ordinary
100.0
Company name
Share class
% of equity
shares held
by the Group
Legal & General Later Living Limited
Ordinary
100.0
Legal & General Leisure Fund Trustee Limited
Ordinary
100.0
Legal & General Life Fund Limited Partnership
Partnership
100.0
Legal & General LTM Structuring (SPV) Limited
Ordinary
100.0
Legal & General Middle East Limited#
Ordinary
100.0
Legal & General Overseas Operations Limited#
Ordinary
100.0
Legal & General Partnership Holdings Limited #
Ordinary
100.0
Legal & General Partnership Services Limited
Ordinary
100.0
Legal & General Pension Fund Trustee Limited
Ordinary
100.0
Legal & General Pension Scheme Trustee
Limited
Ordinary
100.0
Legal & General Pensions Limited
Ordinary
100.0
Legal & General Property Limited
Ordinary
100.0
Legal & General Property Partners (Industrial
Fund) Limited
Ordinary
100.0
Legal & General Property Partners (Industrial)
Nominees Limited
Ordinary
100.0
Legal & General Property Partners (IPIF GP) LLP
Partnership
100.0
Legal & General Property Partners (Leisure GP)
LLP
Partnership
100.0
Legal & General Property Partners (Leisure)
Limited
Ordinary
100.0
Legal & General Property Partners (Life Fund)
Limited
Ordinary
100.0
Legal & General Property Partners (Life Fund)
Nominee Limited
Ordinary
100.0
Legal & General Property Partners (UK PIF
Geared) Limited
Ordinary
100.0
Legal & General Property Partners (UK PIF)
Limited
Ordinary
100.0
Legal & General Property Partners (UKPIF
Geared Two) Limited
Ordinary
100.0
Legal & General Property Partners (UKPIF Two)
Limited
Ordinary
100.0
Legal & General Re Holdings Limited#
Ordinary
100.0
Legal & General Residential (Holdco) Limited
Ordinary
100.0
Legal & General Resources Limited#
Ordinary
100.0
Legal & General Retail Investments (Holdings)
Limited #
Ordinary
100.0
Legal & General SBTR (Ashdown House 1)
Limited
Ordinary
100.0
Legal & General SBTR (Ashdown House 2)
Limited
Ordinary
100.0
Legal & General SBTR (Crowthorne 1) Limited
Ordinary
100.0
Legal & General SBTR (Crowthorne 2) Limited
Ordinary
100.0
Legal & General SBTR (Keresley 1) Limited
Ordinary
100.0
Legal & General SBTR (Keresley 2) Limited
Ordinary
100.0
Legal & General SBTR (Sandy Lane 1) Limited
Ordinary
100.0
Legal & General SBTR (Sandy Lane 2) Limited
Ordinary
100.0
Legal & General SBTR (St Neots) Limited
Ordinary
100.0
Company name
Share class
% of equity
shares held
by the Group
Legal & General SBTR (Stanton Cross 1)
Limited
Ordinary
100.0
Legal & General SBTR (Stanton Cross 2)
Limited
Ordinary
100.0
Legal & General SBTR (Stanton Cross 3)
Limited
Ordinary
100.0
Legal & General SBTR (Stanton Cross 4)
Limited
Ordinary
100.0
Legal & General Science and Tech (Holdings)
Limited
Ordinary
100.0
Legal & General Senior Living Limited
Ordinary
100.0
Legal & General SPV (HoldCo) Limited
Ordinary
100.0
Legal & General Student Living LLP
Partnership
99.9
Legal & General Suburban BTR (Development
2) Limited
Ordinary
100.0
Legal & General Suburban BTR (Development)
Limited
Ordinary
100.0
Legal & General Suburban BTR (Operations)
Limited
Ordinary
100.0
Legal & General Suburban BTR (Property) LLP
Partnership
100.0
Legal & General Trustees Limited
Ordinary
100.0
Legal & General UK BTR GP LLP
Partnership
100.0
Legal & General UK BTR GP Three LLP
Partnership
100.0
Legal & General UK BTR Investment GP LLP
Partnership
100.0
Legal & General UK BTR Investment Nominee
Limited
Ordinary
100.0
Legal & General UK PIF Two GP LLP
Partnership
100.0
Legal & General UK Solar Investments
(Holdings) Limited
Ordinary
100.0
Legal & General UK Structuring SPV LLP
Partnership
100.0
Legal and General Affordable Homes
(Development 3) Limited
Ordinary
100.0
Legal and General Assurance (Pensions
Management) Limited
Ordinary
100.0
Legal and General Assurance Society Limited
Ordinary
100.0
Legal and General Bristol Temple Island
Limited
Ordinary
100.0
Legal and General Capital IM Company Limited
Ordinary
100.0
Legal and General Residential (BTR) 1 LLP
Partnership
99.5
Legal and General Residential (BTR) 2 LLP
Partnership
99.5
LGC 150 Richmond UK Holdco Limited
Ordinary
100.0
LGC 265 S. Orange UK Holdco Limited
Ordinary
100.0
LGC Overseas Holdco Limited
Ordinary
100.0
LGC TEP UK Holdco Limited
Ordinary
100.0
LGGP ECF (GP) LLP
Partnership
100.0
LGGP ECF 1 L.P.
Partnership
100.0
LGGP Holdings Limited
Ordinary
100.0
LGGP Investments 1 Limited
Ordinary
100.0
LGGP Management Limited
Ordinary
100.0
LGGP Nominee 1 Limited
Ordinary
100.0
Company name
Share class
% of equity
shares held
by the Group
LGGP Nominee 2 Limited
Ordinary
100.0
LGIM Commercial Lending Limited
Ordinary
100.0
LGIM International Limited
Ordinary
100.0
LGIM Real Assets (Operator) Limited
Ordinary
100.0
LGIM Real Assets Limited
Ordinary
100.0
LGIM Sustainable DC Property Fund
Ordinary
100.0
LGP Newco Limited
Ordinary
100.0
LGPL No.2 Limited
Ordinary
100.0
Life and Mind Building Oxford Limited
Ordinary
100.0
Nest Residential GP LLP
Partnership
100.0
NSC Building A Limited
Ordinary
100.0
NSC Building B Limited
Ordinary
100.0
Parity Energy Storage Limited
Ordinary
80.0
Performance Retail (General Partner) Limited
Ordinary
100.0
Performance Retail (Nominee) Limited
Ordinary
100.0
Performance Retail Limited Partnership
Partnership
100.0
PRLP GP LLP
Partnership
100.0
Rowley Lane Borehamwood Limited
Ordinary
100.0
Senior Living Medici Holdco Limited
Ordinary
100.0
Senior Living Medici Limited
Ordinary
100.0
Senior Living Urban (Bath) Limited
Ordinary
100.0
Senior Living Urban (Epsom) Limited
Ordinary
100.0
Senior Living Urban (Uxbridge) Limited
Ordinary
100.0
Senior Living Urban (Walton) Limited
Ordinary
100.0
Stratford City Offices (No. 2) General Partner
Limited
Partnership
100.0
Stratford City Offices (No. 2) Limited
Partnership
Partnership
99.8
Student Operations (Clifford) Limited
Ordinary
100.0
Student Operations (Scotway) Limited
Ordinary
100.0
Student Operations (The Place) Limited
Ordinary
100.0
Sunderland Vaux 1 Limited
Ordinary
100.0
The Place Nottingham Limited
Ordinary
100.0
The Springs Thorpe Park Limited
Ordinary
100.0
West Bar Square Limited
Ordinary
100.0
4th Floor Phoenix House, 1 Station Hill, Reading, Berkshire UK RG1 1NB
Proprium Capital Management (UK) LLP
Partnership
74.0
Proprium Capital Partners (UK) Limited
Ordinary
75.0
5 New Street Square, London, England, EC4A 3TW
Alfreton Solar Limited
Ordinary
100.0
Beavor Grange Solar Limited
Ordinary
100.0
Low Farm Solar Limited
Ordinary
100.0
Siddington Solar Farm Limited
Ordinary
100.0
North Point, Stafford Drive, Battlefield Enterprise Park, Shrewsbury,
England, SY1 3BF
Portholme Residents Management Company
Limited
Ordinary
100.0
Company name
Share class
% of equity
shares held
by the Group
The Old Post Office Station Road, Congresbury, Bristol, England, BS49
5DY
London Distribution Park Management
Company Limited
Ordinary
68.0
Bermuda
19 Par La Ville Road, Hamilton, HM11
L&G Reinsurance USA Limited
Ordinary
100.0
Legal & General America Reinsurance Limited
Ordinary
100.0
Legal & General Reinsurance Company Limited
Ordinary
100.0
Legal & General Reinsurance Company No.2
Limited
Ordinary
100.0
Legal & General Resources Bermuda Limited
Ordinary
100.0
Cayman Islands
Maples Corporate Services Limited, PO Box 309, Ugland House, Grand
Cayman, KY1-1104
Atlas Cayman JV GP Ltd
Ordinary
75.0
Casati II JV GP Ltd
Ordinary
75.0
Casati JV GP Ltd
Ordinary
75.0
Marmor Cayman JV GP Ltd
Ordinary
75.0
Proprium Capital Partners LP
Ordinary
class A
75.0
Proprium Cayman Ltd
Ordinary
75.0
Proprium Real Estate Special Situations Fund
GP Ltd
Ordinary
100.0
PSSF Alpha JV GP Ltd
Ordinary
75.0
China
Southwest Room, Floor 3, No. 2123 Pudong Avenue, (Shanghai) Pilot
Free Trade Zone (Bonded Area), Pudong District, Shanghai
Legal & General Business Consulting
(Shanghai) Limited
Ownership
dictated by
subscribed
capital
100.0
Hong Kong
10th Floor, Southland Building 48 Connaught Road Central Hong Kong
SAR
Proprium Capital Partners (Hong Kong) Limited
Ordinary
75.0
Room 902, 9th Floor, Chinachem Tower, 34-37 Connaught Road Central
Legal & General Investment Management Asia
Limited
Ordinary
100.0
Ireland
2 Grand Canal Square, Dublin 2, D02 A342
L&G ESG USD Corporate Bond UCITS ETF
Ordinary
53.1
L&G India INR Government Bond UCITS ETF
Ordinary
38.5
33 Sir John Rogerson's Quay, Dublin 2, D02 XK09
Euro Liquidity Fund
Ordinary
43.6
L&G Asia Bond Fund
Ordinary
100.0
L&G ESG Emerging Markets Government Bond
(USD) Index Fund
Ordinary
97.2
L&G Frontier Markets Equity Fund
Ordinary
43.2
L&G Future World Net Zero Buy & Maintain
Ordinary
100.0
Company name
Share class
% of equity
shares held
by the Group
L&G Future World Net Zero Maturing Buy &
Maintain Fund 23-32
Ordinary
100.0
L&G Future World Net Zero Maturing Buy &
Maintain Fund 33-42
Ordinary
100.0
L&G Global Government Bond Fund
Ordinary
100.0
L&G Net Zero Sterling Corporate Bond Fund
Ordinary
100.0
L&G New Energy Commodities UCITS ETF
Ordinary
78.9
L&G S&P 100 UCITS ETF
Ordinary
57.4
L&G US Corporate Bond Fund
Ordinary
100.0
LGIM (Ireland) Risk Management Solutions plc
Ordinary
100.0
LGIM 2030 Fixed Fund
Ordinary
100.0
LGIM 2030 Inflation Fund
Ordinary
100.0
LGIM 2030 Leveraged Index Linked Gilt Fund
Ordinary
100.0
LGIM 2030 Real Fund
Ordinary
100.0
LGIM 2034 Leveraged Gilt Fund
Ordinary
100.0
LGIM 2034 Leveraged Index Linked Gilt Fund
Ordinary
100.0
LGIM 2035 Fixed Fund
Ordinary
100.0
LGIM 2035 Inflation Fund
Ordinary
100.0
LGIM 2035 Real Fund
Ordinary
100.0
LGIM 2037 Leveraged Index Linked Gilt Fund
Ordinary
100.0
LGIM 2038 Leveraged Gilt Fund
Ordinary
100.0
LGIM 2040 Fixed Fund
Ordinary
100.0
LGIM 2040 Inflation Fund
Ordinary
100.0
LGIM 2040 Leveraged Index Linked Gilt Fund
Ordinary
100.0
LGIM 2040 Real Fund
Ordinary
100.0
LGIM 2042 Leveraged Gilt Fund
Ordinary
100.0
LGIM 2042 Leveraged Index Linked Gilt Fund
Ordinary
100.0
LGIM 2045 Fixed Fund
Ordinary
100.0
LGIM 2045 Inflation Fund
Ordinary
100.0
LGIM 2045 Leveraged Gilt Fund
Ordinary
100.0
LGIM 2045 Real Fund
Ordinary
100.0
LGIM 2047 Leveraged Index Linked Gilt Fund
Ordinary
100.0
LGIM 2049 Leveraged Gilt Fund
Ordinary
100.0
LGIM 2050 Fixed Fund
Ordinary
100.0
LGIM 2050 Inflation Fund
Ordinary
100.0
LGIM 2050 Leveraged Index Linked Gilt Fund
Ordinary
100.0
LGIM 2050 Real Fund
Ordinary
100.0
LGIM 2055 Fixed Fund
Ordinary
100.0
LGIM 2055 Leveraged Gilt Fund
Ordinary
100.0
LGIM 2055 Leveraged Index Linked Gilt Fund
Ordinary
100.0
LGIM 2055 Real Fund
Ordinary
100.0
LGIM 2060 Fixed Fund
Ordinary
100.0
LGIM 2060 Inflation Fund
Ordinary
100.0
LGIM 2060 Leveraged Gilt Fund
Ordinary
100.0
LGIM 2062 Leveraged Index Linked Gilt Fund
Ordinary
100.0
LGIM 2068 Leveraged Gilt Fund
Ordinary
100.0
Company name
Share class
% of equity
shares held
by the Group
LGIM 2068 Leveraged Index Linked Gilt Fund
Ordinary
100.0
LGIM 2073 Leveraged Gilt Fund
Ordinary
100.0
LGIM 2073 Leveraged Index Linked Gilt Fund
Ordinary
100.0
LGIM Bespoke Fund 1
Ordinary
100.0
LGIM Credit and Liquidity - Fund BM
Ordinary
100.0
LGIM Credit and Liquidity - Fund BN
Ordinary
100.0
LGIM Fixed Long Duration Fund
Ordinary
100.0
LGIM Fixed Short Duration Fund
Ordinary
100.0
LGIM Hedging Fund AC
Ordinary
100.0
LGIM Hedging Fund AI
Ordinary
100.0
LGIM Hedging Fund AR
Ordinary
100.0
LGIM Hedging Fund AS
Ordinary
100.0
LGIM Hedging Fund AW
Ordinary
100.0
LGIM Hedging Fund BG
Ordinary
100.0
LGIM Hedging Fund BJ
Ordinary
100.0
LGIM Hedging Fund BL
Ordinary
100.0
LGIM Hedging Fund BT
Ordinary
100.0
LGIM Hedging Fund CJ
Ordinary
100.0
LGIM Hedging Fund CK
Ordinary
100.0
LGIM Hedging Fund DC
Ordinary
100.0
LGIM Hedging Fund DJ
Ordinary
100.0
LGIM Hedging Fund DO
Ordinary
100.0
LGIM Hedging Fund L
Ordinary
100.0
LGIM Hedging Fund O
Ordinary
100.0
LGIM Hedging Fund WH
Ordinary
100.0
LGIM Hedging Fund WS
Ordinary
100.0
LGIM Hedging Fund WT
Ordinary
100.0
LGIM Hedging Fund ZZ
Ordinary
100.0
LGIM Leveraged Synthetic Equity Fund
Ordinary
100.0
LGIM Leveraged Synthetic Equity Fund - GBP
Currency Hedged Fund
Ordinary
100.0
LGIM Maturing Buy & Maintain Credit Fund
2025-2029
Ordinary
100.0
LGIM Maturing Buy & Maintain Credit Fund
2030-2034
Ordinary
100.0
LGIM Maturing Buy & Maintain Credit Fund
2035-2039
Ordinary
100.0
LGIM Maturing Buy & Maintain Credit Fund
2040-2054
Ordinary
100.0
LGIM Real Long Duration Fund
Ordinary
100.0
LGIM Real Short Duration Fund
Ordinary
100.0
LGIM Solutions Fund BB
Ordinary
100.0
LGIM Solutions Fund BK
Ordinary
100.0
LGIM Solutions Fund BW
Ordinary
100.0
LGIM Solutions Fund CA
Ordinary
100.0
LGIM Solutions Fund CB
Ordinary
100.0
LGIM Solutions Fund CC
Ordinary
100.0
Company name
Share class
% of equity
shares held
by the Group
LGIM Solutions Fund CG
Ordinary
100.0
LGIM Solutions Fund CH
Ordinary
100.0
LGIM Solutions Fund CP
Ordinary
100.0
LGIM Solutions Fund CQ
Ordinary
100.0
LGIM Solutions Fund CS
Ordinary
100.0
LGIM Solutions Fund CT
Ordinary
100.0
LGIM Solutions Fund DB
Ordinary
100.0
LGIM Solutions Fund DE
Ordinary
100.0
LGIM Solutions Fund DF
Ordinary
100.0
LGIM Solutions Fund DM
Ordinary
100.0
LGIM Solutions Fund DN
Ordinary
100.0
LGIM Solutions Fund DQ
Ordinary
100.0
LGIM Solutions Fund DR
Ordinary
100.0
LGIM Solutions Fund DU
Ordinary
100.0
LGIM Solutions Fund DV
Ordinary
100.0
LGIM Solutions Fund DX
Ordinary
100.0
LGIM Solutions Fund DY
Ordinary
100.0
LGIM Solutions Fund DZ
Ordinary
100.0
LGIM Solutions Fund EA
Ordinary
100.0
LGIM Solutions Fund EB
Ordinary
100.0
LGIM Solutions Fund EE
Ordinary
100.0
LGIM Solutions Fund EG
Ordinary
100.0
LGIM Solutions Fund EH
Ordinary
100.0
LGIM Solutions Fund EI
Ordinary
100.0
LGIM Solutions Fund EJ
Ordinary
100.0
LGIM Solutions Fund EK
Ordinary
100.0
LGIM Solutions Fund EL
Ordinary
100.0
LGIM Solutions Fund EM
Ordinary
100.0
LGIM Solutions Fund M
Ordinary
100.0
LGIM Synthetic Leveraged Credit Fund
Ordinary
100.0
LGIM Unleveraged Defensive Synthetic Equity
Fund
Ordinary
100.0
Sterling Liquidity Fund
Ordinary
46.6
Sterling Liquidity Plus Fund
Ordinary
36.7
US Dollar Liquidity Fund
Ordinary
50.2
70 Sir John Rogerson Quay, Dublin 2, D02 R296
Finovation Limited
Ordinary
and
convertible
100.0
L&G ESG Paris Aligned World Equity Index
Fund
Ordinary
100.0
L&G Private Markets LTAF
Ordinary
100.0
L&G RAFI Multi-Factor Climate Transition Index
Fund
Ordinary
100.0
Legal & General ICAV
Ordinary
100.0
Legal & General QIAIF ICAV
Ordinary
100.0
Legal & General UCITS ETF plc
Ordinary
100.0
LGIM Liquidity Funds plc
Ordinary
100.0
Company name
Share class
% of equity
shares held
by the Group
LGIM Managers (Europe) Limited
Ordinary
100.0
Japan
22F Toranomon Kotohira Tower, 1-2-8 Toranomon, Minato-ku, Tokyo,
105-0001
Legal & General Investment Management Japan
KK
Ordinary
100.0
Jersey
12 Castle Street St Helier, JE2 3RT
Borehamwood Property Unit Trust
Unit
100.0
22 Grenville Street, St. Helier, JE4 8PX
Clifford Limited
Ordinary
100.0
L&G Manchester Limited
Ordinary
100.0
Legal & General Student Living Limited
Ordinary
99.9
Scotway Limited
Ordinary
100.0
3rd Floor, 37 Esplanade, St. Helier, JE1 1AD
L&G Affordable Housing Holdco Limited
Ordinary
100.0
L&G Affordable Housing Northern Holdco
Limited
Ordinary
100.0
L&G Managed Fund Holdco Limited
Ordinary
100.0
47 Esplanade, St Helier, JE1 0BD
Performance Retail Unit Trust
Unit
100.0
Apex Group, IFC 5, St. Helier, JE1 1ST
Bishopsgate Long Term Property Fund General
Partner Limited
Ordinary
100.0
Aztec Group House, IFC6, The Esplanade, St. Helier, JE4 0QH
Access Development General Partner Limited
Ordinary
100.0
Access Development II General Partner Limited
Ordinary
100.0
Vantage General Partner Limited
Partnership
100.0
Lime Grove House, Green Street, St Helier, JE1 2ST
SCBD S6 Trust
Unit
100.0
Stratford City Offices Jersey Unit Trust (No.2)
Unit
99.8
Luxembourg
15 Boulevard F.W. Raiffeisen, L-2411
ESOF Casati Holdco S.\u00e0 r.l.
Ordinary
100.0
European Real Estate Special Opportunities
Fund GP S.\u00e0 r.l.
Ordinary
100.0
European Real Estate Special Opportunities
Fund I
Partnership
100.0
L&G Carried Interest Digital Infrastructure GP
S.\u00e0 r.l.
Ordinary
100.0
L&G Carried Interest Digital Infrastructure SCSp
Ordinary
100.0
L&G Digital Infrastructure Co-Invest 1 GP S.\u00e0
r.l.
Ordinary
100.0
L&G Digital Infrastructure Co-Invest 1 SCSp
Ordinary
100.0
L&G Digital Infrastructure Co-Invest 2 GP S.\u00e0
r.l.
Ordinary
100.0
L&G Digital Infrastructure Co-Invest 2 SCSp
Ordinary
100.0
L&G Digital Infrastructure Co-Invest 3 GP S.\u00e0
r.l.
Ordinary
100.0
L&G Digital Infrastructure Co-Invest 3 SCSp
Ordinary
100.0
Company name
Share class
% of equity
shares held
by the Group
L&G Digital Infrastructure GP S.\u00e0 r.l.
Ordinary
100.0
L&G Digital Infrastructure SCSp
Ordinary
100.0
L&G NTR Clean Power Transition General
Partner IV S.\u00e0 r.l.
Ordinary
100.0
L&G NTR Clean Power Transition Holding S.\u00e0
r.l.
Ordinary
100.0
L&G NTR Clean Power Transition IV SCSp
Ordinary
100.0
L&G Private Markets SV S.\u00e0 r.l.
Ordinary
100.0
L&G Team Digital Infrastructure SCSp
Ordinary
100.0
L&G Umbrella GP S.\u00e0 r.l.
Ordinary
100.0
Legal & General Private Markets SCA
Partnership
100.0
2-4, Rue Eugene Ruppert, L-2453
L&G Alternative Risk Premia Fund
Ordinary
83.2
L&G Buy & Maintain Credit Fund
Ordinary
96.2
L&G Climate Action Global Equity Fund
Ordinary
61.8
L&G Commodity Index Fund
Ordinary
60.1
L&G Defensive Synthetic Equity Index Fund
Ordinary
100.0
L&G Emerging Markets High Yield Bond Fund
Ordinary
96.0
L&G Emerging Markets Investment Grade Hard
Currency Corporate Bond Fund
Ordinary
74.6
L&G Emerging Markets Short Duration Bond
Fund
Ordinary
35.9
L&G Euro High Yield Bond Fund
Ordinary
100.0
L&G Global Aggregate Bond Fund
Ordinary
100.0
L&G Global Diversified Bond Fund
Ordinary
47.0
L&G Global Special Situations Credit Fund
Ordinary
98.4
L&G Global Unconstrained Bond Fund
Ordinary
86.7
L&G Net Zero Global Corporate Bond Fund
Ordinary
44.3
L&G Net Zero Short Dated Global Corporate
Bond Fund
Ordinary
100.0
L&G UK Core Plus Bond Fund
Ordinary
100.0
L&G US High Yield Bond Fund
Ordinary
99.9
L&G US Securitised Fund
Ordinary
100.0
L&G US Securitised Plus Fund
Ordinary
42.5
Legal & General SICAV
Ordinary
100.0
8 rue Lou Hemmer, Senningerberg, L-1748
L&G NTR Clean Power (Europe) III SCSp RAIF
Ordinary
49.7
L&G NTR Clean Power GP S.\u00e0 r.l.
Ordinary
100.0
L&G NTR Clean Power Master Holding S.\u00e0 r.l.
Ordinary
46.0
LGIM Clean Power General Partner S.\u00e0 r.l.
Ordinary
100.0
Scotland
50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ
L&G UK Universities Ventures (Carry) GP LLP
Partnership
100.0
L&G UK Universities Ventures (Carry) LP
Partnership
100.0
L&G UK Universities Ventures GP LLP
Partnership
100.0
L&G UK Universities Ventures LP
Partnership
100.0
UK PIF FGP LLP
Partnership
100.0
Company name
Share class
% of equity
shares held
by the Group
UKPIF Two Founder GP Limited
Partnership
100.0
Singapore
23 Church Street, Level 7, Units 718-19 and 785, Capital Square, 049481
LGIM Singapore Pte. Limited
Ordinary
100.0
The Netherlands
Strawinskylaan 1123, 1077 XX, Amsterdam
ESOF I Co\u00f6peratief U.A.
Ordinary
100.0
ESOF Willow Euro JV B.V.
Ordinary
100.0
ESOF Willow Euro Platform B.V.
Ordinary
100.0
United States
108 Lakeland Avenue, Dover, County of Kent, Delaware, DE 19901
L&G 265 S. Orange Holdings, LLC
Membership
interests
100.0
3275 Bennett Creek Avenue, Frederick, MD 21704
Banner Life Insurance Company
Ordinary
100.0
3500 South Dupont Highway, City of Dover, County of Kent, Delaware
19901
Potomac Ventures Number 1 Inc.
Ordinary
100.0
70 East Sunrise Highway, Suite 500, Valley Stream, New York 11581
William Penn Life Insurance Company of New
York Inc
Ordinary
100.0
71 South Wacker Drive, Suite 800, Chicago, IL
L&G 15091 Belford Holdings LLC
Membership
interests
100.0
L&G 15091 Belford LLC
Membership
interests
100.0
838 Walker Road, Suite 21-2, Dover, DE 19904
L&G 150 Richmond Holdings, LLC
Membership
interests
100.0
L&G 150 Richmond JV, LLC
Class A and
B
membership
interests
100.0
L&G 265 S. Orange JV, LLC
Class A and
B
membership
interests
100.0
L&G TEP Holdings, LLC
Ordinary
100.0
L&G TEP JV, LLC
Class A and
class B
shares
100.0
PVD Incubator, LLC
Ordinary
100.0
850 New Burton Road, Suite 201, Dover, Delaware 19904
Chesapeake Ventures, LLC
Ordinary
100.0
FBV Financing-1, LLC
Ordinary
100.0
FBV Financing-2, LLC
Ordinary
100.0
FBV Financing-3, LLC
Ordinary
100.0
FBV Financing-4, LLC
Membership
interests
100.0
FBV Financing-5, LLC
Membership
interests
100.0
Company name
Share class
% of equity
shares held
by the Group
L&G 375 Broadway Holdings 1, LLC
Membership
interests
100.0
L&G 375 Broadway Holdings 2, LLC
Membership
interests
100.0
L&G 375 Broadway, LLC
Membership
interests
100.0
L&G 544 Golden Ridge Holdings 1, LLC
Ordinary
100.0
L&G 544 Golden Ridge Holdings 2, LLC
Ordinary
100.0
L&G 544 Golden Ridge, LLC
Ordinary
100.0
L&G 765 Adams Holdings LLC
Membership
interests
100.0
L&G 765 Adams LLC
Membership
interests
100.0
Legal & General Everest US Bidco LLC
Membership
interests
100.0
Legal & General US Real Estate Equity Holding,
LLC
Membership
interests
100.0
C/O Corporation Service Company, 251 Little Falls Drive, Wilmington, Delaware
19808
L&G Reinsurance USA Holdings Limited
Common
stock
100.0
L&G USA OCIO Limited
Common
stock
100.0
L&G USA Resources Limited
Common
stock
100.0
Proprium Capital Real Estate Partners, LLC
Membership
interests
75.0
Corporation Service Company, 2711 Centerville Road, Suite 400,
Wilmington, Delaware 19808
Proprium Capital Partners GP, LLC
Membership
interests
100.0
Corporation Trust Center, 1209 Orange Street, Wilmington, County of
New Castle, Delaware 19801
Legal & General America Inc.
Ordinary
100.0
Legal & General Investment Management
America Inc.
Ordinary
100.0
Legal & General Investment Management
United States (Holdings), Inc.
Ordinary
100.0
LGC 150 Richmond US Holdco, LLC
Membership
interests
100.0
LGC 265 S. Orange US Holdco, LLC
Membership
interests
100.0
LGC US Holdco 1 Inc.
Ordinary
100.0
LGC US Holdco 2, LLC
Ordinary
100.0
Marsh Management Services Inc, 463 Mountain View Drive, Suite 301, 3rd
Floor, Colchester, Vermont 05446
First British Vermont Reinsurance Company II,
Limited
Ordinary
100.0
First British Vermont Reinsurance Company III,
Limited
Ordinary
100.0
First British Vermont Reinsurance Company IV
Limited
Ordinary
100.0
(ii) Associates and joint ventures
The Group has the following significant holdings classified as associates and joint ventures which have been included as financial
investments and investments in associates and joint ventures accounted for using the equity method. The gross assets of these
companies are in part funded by borrowings which are non-recourse to the Group.
Company name
Country of incorporation
Accounting treatment
Investment type
Share class
% of equity
shares held by
Group
245 Hammersmith Road (General Partner) Limited
England and Wales
FVTPL
Joint Venture
Partnership
50.0
245 Hammersmith Road Limited Partnership
England and Wales
FVTPL
Joint Venture
Partnership
50.0
245 HR GP LLP
England and Wales
FVTPL
Joint Venture
Partnership
50.0
Access Development II Limited Partnership
Jersey
Equity Method
Joint Venture
Ordinary
50.0
Access Development Limited Partnership
Jersey
Equity Method
Joint Venture
Ordinary
50.0
Bruntwood Science Management Services Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Bruntwood SciTech Limited
England and Wales
Equity Method
Associate
Ordinary
43.9
ECF (General Partner) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
33.3
English Cities Fund
England and Wales
FVTPL
Associate
Partnership
35.4
Gravesend Coldharbour Road Management Company Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Household Capital Pty Limited
Australia
Equity Method
Associate
Ordinary
38.1
Imagine Mortgages Limited (Generation Home)
England and Wales
FVTPL
Associate
Ordinary
39.5
ImpactA Global Holding Limited
England and Wales
Equity Method
Associate
Ordinary
40.0
Kensa Group Limited
England and Wales
FVTPL
Associate
Ordinary
37.0
MoneyHub Financial Technology Limited
England and Wales
FVTPL
Associate
Ordinary
12.6
Newcastle Helix Developments LLP
England and Wales
FVTPL
Associate
Ordinary
33.0
Nomura Herne Hill
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
NTR Asset Management Europe DAC
Ireland
Equity Method
Associate
Ordinary
25.0
Oxford University Property Development Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Pemberton Asset Management Holdings Limited
Jersey
FVTPL
Associate
Ordinary
40.0
Proprium Capital Partners (Australia) Pty Ltd
Australia
Equity Method
Joint Venture
Ordinary
37.5
Salary Direct Holdings Limited
Jersey
FVTPL
Associate
Ordinary
53.5
Senior Living (Comberton) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Senior Living (Farnhams) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Senior Living (Freelands) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Senior Living (Hemel Hempstead) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Senior Living (Matchams) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Senior Living (Sunbury-on-Thames) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Senior Living (Walkern) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Sennen Finance Designated Activity Company
Ireland
Equity Method
Joint Venture
N/A
0.0
Sero Technologies Limited
England and Wales
FVTPL
Associate
Ordinary
21.5
Smartr365 Finance Limited
England and Wales
FVTPL
Associate
Ordinary
40.4
SOJV LLP
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Techficient Holdings LLC
USA
Equity Method
Associate
N/A
45.0
", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInSubsidiariesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-745": { "value": "
(ii) Associates and joint ventures
The Group has the following significant holdings classified as associates and joint ventures which have been included as financial
investments and investments in associates and joint ventures accounted for using the equity method. The gross assets of these
companies are in part funded by borrowings which are non-recourse to the Group.
Company name
Country of incorporation
Accounting treatment
Investment type
Share class
% of equity
shares held by
Group
245 Hammersmith Road (General Partner) Limited
England and Wales
FVTPL
Joint Venture
Partnership
50.0
245 Hammersmith Road Limited Partnership
England and Wales
FVTPL
Joint Venture
Partnership
50.0
245 HR GP LLP
England and Wales
FVTPL
Joint Venture
Partnership
50.0
Access Development II Limited Partnership
Jersey
Equity Method
Joint Venture
Ordinary
50.0
Access Development Limited Partnership
Jersey
Equity Method
Joint Venture
Ordinary
50.0
Bruntwood Science Management Services Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Bruntwood SciTech Limited
England and Wales
Equity Method
Associate
Ordinary
43.9
ECF (General Partner) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
33.3
English Cities Fund
England and Wales
FVTPL
Associate
Partnership
35.4
Gravesend Coldharbour Road Management Company Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Household Capital Pty Limited
Australia
Equity Method
Associate
Ordinary
38.1
Imagine Mortgages Limited (Generation Home)
England and Wales
FVTPL
Associate
Ordinary
39.5
ImpactA Global Holding Limited
England and Wales
Equity Method
Associate
Ordinary
40.0
Kensa Group Limited
England and Wales
FVTPL
Associate
Ordinary
37.0
MoneyHub Financial Technology Limited
England and Wales
FVTPL
Associate
Ordinary
12.6
Newcastle Helix Developments LLP
England and Wales
FVTPL
Associate
Ordinary
33.0
Nomura Herne Hill
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
NTR Asset Management Europe DAC
Ireland
Equity Method
Associate
Ordinary
25.0
Oxford University Property Development Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Pemberton Asset Management Holdings Limited
Jersey
FVTPL
Associate
Ordinary
40.0
Proprium Capital Partners (Australia) Pty Ltd
Australia
Equity Method
Joint Venture
Ordinary
37.5
Salary Direct Holdings Limited
Jersey
FVTPL
Associate
Ordinary
53.5
Senior Living (Comberton) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Senior Living (Farnhams) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Senior Living (Freelands) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Senior Living (Hemel Hempstead) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Senior Living (Matchams) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Senior Living (Sunbury-on-Thames) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Senior Living (Walkern) Limited
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Sennen Finance Designated Activity Company
Ireland
Equity Method
Joint Venture
N/A
0.0
Sero Technologies Limited
England and Wales
FVTPL
Associate
Ordinary
21.5
Smartr365 Finance Limited
England and Wales
FVTPL
Associate
Ordinary
40.4
SOJV LLP
England and Wales
Equity Method
Joint Venture
Ordinary
50.0
Techficient Holdings LLC
USA
Equity Method
Associate
N/A
45.0
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestsInOtherEntitiesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-747": { "value": "
43. Interests in structured entities
A structured entity is an entity that has been designed so that voting or similar rights are not the dominating factor in deciding who controls
the\u00a0entity, such as when voting rights might relate to administrative tasks only and the relevant activities are directed by means of contractual
arrangement. The Group has interests in investment vehicles which, depending upon their status, are classified as either consolidated or
unconsolidated structured entities as described below:
\u2022 debt securities, consisting of traditional asset backed securities, together with securitisation and debentures and collateralised debt
obligations\u00a0(CDOs)
\u2022 investment funds, largely being unit trusts
\u2022 specialised investment vehicles, analysed between Irish Collective Asset-management Vehicles (ICAVs), Open Ended Investment Companies
(OEICs), Soci\u00e9t\u00e9s d\u2019Investissement \u00e0 Capital Variables (SICAVs), Specialised Investment Funds (SIFs), Authorised Contractual Schemes (ACSs),
Qualifying Investor Alternative Investment Fund (QIAIF), liquidity funds, Common Contractual Fund (CCF) and property unit trusts.
All of the Group\u2019s holdings in the above vehicles are subject to the terms and conditions of the respective investment vehicle\u2019s offering
documentation and are susceptible to market price risk arising from uncertainties about future values of those investment vehicles. The
investment manager makes investment decisions after extensive due diligence of the underlying investment vehicle, including consideration
of its strategy and the overall quality of the underlying investment vehicle\u2019s manager.
All of the investment vehicles in the investment portfolio are managed by portfolio managers who are compensated by the respective
investment vehicles for their services. Such compensation generally consists of an asset-based fee and a performance related incentive
fee and is reflected in the valuation of the investment vehicles.
(i) Interests in consolidated structured entities
The Group has determined that where it has control over an investment vehicle, that investment is a consolidated structured entity. The Group has
not provided and has no intention to provide, financial or other support to any other structured entities which it does not consolidate.
(ii) Interests in unconsolidated structured entities
As part of its investment activities, the Group also invests in unconsolidated structured entities. As at 31 December 2025, the Group\u2019s
interest in such entities reflected on the Group\u2019s Consolidated Balance Sheet and classified as financial investments held at fair value
through profit or loss was \u00a322,477m (2024: \u00a325,015m).
A summary of the Group\u2019s interests in unconsolidated structured entities is provided below:
2025
2024
Financial investments
\u00a3m
\u00a3m
Debt securities
Analysed as:
Asset backed securities
1,550
4,024
Securitisations and debentures
1,912
962
CDOs
66
66
Investment funds and Specialised Investment Vehicles
Analysed as:
Unit trusts
14,890
13,991
Property limited partnerships
830
806
Exchange traded funds
154
209
Liquidity funds
74
22
ICAVs
534
279
OEICs
228
411
SICAVs
552
569
SIFs
1,659
3,650
Property unit trusts
28
26
Total
22,477
25,015
Management fees received for investments that the Group manages also represent interests in unconsolidated structured entities and the
Group always maintains an interest in those funds which it manages. Where the Group does not manage the investments, its maximum
exposure to loss is the carrying amount in the Group Consolidated Balance Sheet. Where the Group does manage these investments, the
maximum exposure is the underlying balance sheet value, together with future management fees.
The table overleaf shows the assets under management of those structured entities which the Group manages, together with investment
management fees received from external parties.
AUM
Investment
management fees
AUM
Investment
management fees
2025
2025
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Investment funds
113,980
138
103,510
131
Specialised Investment Vehicles
38,773
62
29,688
54
Analysed as:
ACS
2,693
1
2,538
1
OEICs
168
1
222
1
SICAVs
2,575
4
2,358
3
Property limited partnerships
3,234
14
3,289
13
ETF
13,717
30
9,463
25
ICAV
9,622
10
6,522
8
QIAF
1,833
1
967
1
CCF
4,931
1
4,329
2
Total
152,753
200
133,198
185
No significant sponsorship has been provided to any of the above entities. The Group has not and has no intention, to provide any significant
financial or other support to any other structured entities which it does not consolidate.
In addition to the above, the Group has an exposure of \u00a3288m (2024: \u00a3260m) related to special purpose vehicles classified as joint ventures
and accounted for using the equity method, with a carrying value on the Group Consolidated Balance Sheet as at 31 December 2025 of \u00a3nil
(2024: \u00a3nil).", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestsInUnconsolidatedStructuredEntitiesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-746": { "value": "
43. Interests in structured entities
A structured entity is an entity that has been designed so that voting or similar rights are not the dominating factor in deciding who controls
the\u00a0entity, such as when voting rights might relate to administrative tasks only and the relevant activities are directed by means of contractual
arrangement. The Group has interests in investment vehicles which, depending upon their status, are classified as either consolidated or
unconsolidated structured entities as described below:
\u2022 debt securities, consisting of traditional asset backed securities, together with securitisation and debentures and collateralised debt
obligations\u00a0(CDOs)
\u2022 investment funds, largely being unit trusts
\u2022 specialised investment vehicles, analysed between Irish Collective Asset-management Vehicles (ICAVs), Open Ended Investment Companies
(OEICs), Soci\u00e9t\u00e9s d\u2019Investissement \u00e0 Capital Variables (SICAVs), Specialised Investment Funds (SIFs), Authorised Contractual Schemes (ACSs),
Qualifying Investor Alternative Investment Fund (QIAIF), liquidity funds, Common Contractual Fund (CCF) and property unit trusts.
All of the Group\u2019s holdings in the above vehicles are subject to the terms and conditions of the respective investment vehicle\u2019s offering
documentation and are susceptible to market price risk arising from uncertainties about future values of those investment vehicles. The
investment manager makes investment decisions after extensive due diligence of the underlying investment vehicle, including consideration
of its strategy and the overall quality of the underlying investment vehicle\u2019s manager.
All of the investment vehicles in the investment portfolio are managed by portfolio managers who are compensated by the respective
investment vehicles for their services. Such compensation generally consists of an asset-based fee and a performance related incentive
fee and is reflected in the valuation of the investment vehicles.
(i) Interests in consolidated structured entities
The Group has determined that where it has control over an investment vehicle, that investment is a consolidated structured entity. The Group has
not provided and has no intention to provide, financial or other support to any other structured entities which it does not consolidate.
(ii) Interests in unconsolidated structured entities
As part of its investment activities, the Group also invests in unconsolidated structured entities. As at 31 December 2025, the Group\u2019s
interest in such entities reflected on the Group\u2019s Consolidated Balance Sheet and classified as financial investments held at fair value
through profit or loss was \u00a322,477m (2024: \u00a325,015m).
A summary of the Group\u2019s interests in unconsolidated structured entities is provided below:
2025
2024
Financial investments
\u00a3m
\u00a3m
Debt securities
Analysed as:
Asset backed securities
1,550
4,024
Securitisations and debentures
1,912
962
CDOs
66
66
Investment funds and Specialised Investment Vehicles
Analysed as:
Unit trusts
14,890
13,991
Property limited partnerships
830
806
Exchange traded funds
154
209
Liquidity funds
74
22
ICAVs
534
279
OEICs
228
411
SICAVs
552
569
SIFs
1,659
3,650
Property unit trusts
28
26
Total
22,477
25,015
Management fees received for investments that the Group manages also represent interests in unconsolidated structured entities and the
Group always maintains an interest in those funds which it manages. Where the Group does not manage the investments, its maximum
exposure to loss is the carrying amount in the Group Consolidated Balance Sheet. Where the Group does manage these investments, the
maximum exposure is the underlying balance sheet value, together with future management fees.
The table overleaf shows the assets under management of those structured entities which the Group manages, together with investment
management fees received from external parties.
AUM
Investment
management fees
AUM
Investment
management fees
2025
2025
2024
2024
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Investment funds
113,980
138
103,510
131
Specialised Investment Vehicles
38,773
62
29,688
54
Analysed as:
ACS
2,693
1
2,538
1
OEICs
168
1
222
1
SICAVs
2,575
4
2,358
3
Property limited partnerships
3,234
14
3,289
13
ETF
13,717
30
9,463
25
ICAV
9,622
10
6,522
8
QIAF
1,833
1
967
1
CCF
4,931
1
4,329
2
Total
152,753
200
133,198
185
No significant sponsorship has been provided to any of the above entities. The Group has not and has no intention, to provide any significant
financial or other support to any other structured entities which it does not consolidate.
In addition to the above, the Group has an exposure of \u00a3288m (2024: \u00a3260m) related to special purpose vehicles classified as joint ventures
and accounted for using the equity method, with a carrying value on the Group Consolidated Balance Sheet as at 31 December 2025 of \u00a3nil
(2024: \u00a3nil).", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutConsolidatedStructuredEntitiesExplanatory", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-748": { "value": "One Coleman Street, London EC2R 5AA. Registered in England and Wales, No. 01417162", "dimensions": { "concept": "ifrs-full:AddressOfRegisteredOfficeOfEntity", "language": "en", "entity": "scheme:213800JH9QQWHLO99821", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } } } }