Our strategy

Our strategy inspires us to help people achieve financial security and makes us economically and socially useful to society.

External influences on our business

Our long-term plans are driven by six "global growth drivers". However, in the short and medium term, global political and economic factors create other opportunities for growth and present risks too.

Growth drivers

Being global leaders in pensions de-risking

Growth driver

Ageing demographics

People are living longer, which means that pension savings need to last longer. By 2040, the number of people in the UK aged 75 and over is estimated to rise to nearly 10 million.

Our motivation

Defined Benefit (DB) pensions are in crisis. An estimated £560 billion of DB pensions within the private sector under extreme pressure due to low interest rates and the ageing population.

What we do

We can help companies who have DB pension schemes by taking on their trustees and effectively "de-risking" their pension liabilities. This means that members' pensions can be paid on time and in full.

Progress

  • Strong new business pipeline with many large deals expected to be written in H2 2018
  • £521 million in lifetime mortgage advances in H1 2018
  • US pensions risk transfer premiums have more than doubled in H1 2018
  • Strong liability driven investments business in H1 2018, with external net inflows of £26.2 billion

All figures correct to 30.06.18

Continue to build a world-class international asset management business

Growth driver

Globalisation of asset markets

Global wealth assets are valued at over $80 trillion. Our share of this number is around 1.2% (and growing) as we export more of our skills internationally.

Our motivation

Our business is both successful in the UK and the US. We're actively applying our skills in other areas such as Asia and the Middle East.

What we do

Our international businesses are continuously expanding across the US, Europe, the Gulf and Asia. Our asset management and risk management skills are considered to be market leading as we look to apply the same successful business model in other locations around the world.

Progress

  • US net flows of $11.5bn in H1 2018
  • Robust demand for US fixed income and LDI
  • 375 external US customer mandates, up 11% from 2017
  • Building European distribution capabilities

All figures correct to 30.06.18

Use long-term capital to become the UK leader in direct investments

Growth driver

Creating real assets

Due to years of under-investment, there is an urgent need to invest in infrastructure and urban regeneration. Assets need to be invested over the very long term so we can improve returns for shareholders, provide pension holder security and breath life back into areas which once thrived. Many cities in the UK (outside of London) need investment to match global competitors. Our housing developments look to help towards solving the housing crisis.

Rationale

We invest over £56 billion of the group’s pension annuity assets in higher performing risk-adjusted classes. This means that direct investments can offer better and more predictable returns to shareholders. It also creates many economic benefits for the UK.

What we do

We offer investment solutions at every stage of a scheme’s life cycle. From the growth phase, through de-risking with LDI and bulk annuities, right to the setting up of new DC schemes.

Progress

  • £16.3 billion of group-wide direct investments
  • Full ownership of CALA Homes in March 2018; revenues up 14%, home completions up 29%
  • Launched affordable housing arm in March 2018
  • Build-to-rent pipeline of 3,000 homes across nine sites

All figures correct to 30.06.18

we help people achieve financial security by providing insurance and workplace pensions

Growth driver

Welfare reforms

Many families that rely on state benefits struggle to survive financially following the death, disability or long-term sickness of a loved one. People need help to save more for retirement and to build financial independence.

Our motivation

Many households struggle financially following a death, disability or sickness in the family. Company and individual insurance cover can help safeguard families from financial uncertainty.

What we do

By providing insurance that covers life, critical illness, disability, long-term sickness, buildings, possessions, pet and travel, we help people protect themselves from financial troubles should the unthinkable happens.

Progress

  • UK market leaders for retail protection, market share of around 23%
  • Largest UK manager of DC assets, with £72.3 billion of assets
  • 2.9 million UK DC customers in over 13,000 schemes

All figures correct to 30.06.18

Achieve market leadership in digital provision of insurance and retail investments

Growth driver

Technological innovation

As consumer tech continues to evolve, so does the way we all manage our finances. Reliable and relevant technological solutions can mean the difference between success and failure.

Our motivation

Its no surprise that consumers often choose companies that offer low prices and digital access. Our digital strategy allows insurance customers to obtain quotes, apply for policies and review and renew them using mobile technology.

What we do

We want to be a market leader in offering consumers digital access to life insurance, general insurance and personal investments. At the same time we need to give our customers an excellence in service delivery at a low cost, achieved through efficient digital operating models. Our continuous developments of emerging technology - including blockchain - will raise efficiency levels for both customers and businesses.

Progress

  • 'SmartQuote' GI app creating a strong pipelines of opportunities with new partnership with Co-Op Bank
  • Winner of Insurance Times Claims Technology Solution of the year
  • Half a million employees on Salary Finance employer platform - a fivefold increase over 12 months
  • £3 million investment into Smartr365, a digital B2B mortgage broking platform

All figures correct to 30.06.18

A man in a room smiling

Building economic growth by investing in our futures

Growth driver

Today’s capital

In recent years, equity investment capital has been in short supply. The UK needs investment in modern, digital start-up businesses to create jobs and stimulate economic growth.

Our motivation

Consumers often choose companies that can offer low prices and digital access. We believe that the market will favour businesses that build low-cost, efficient, digital operating models.

What we do

We are committed to investing in SME businesses over the long-term - providing support to the UK economy, creating jobs, long-term infrastructure, better housing and available capital to fund start-up businesses, whilst giving a better risk-adjusted return for shareholders.

Progress

  • SME Finance assets up to £366 million from £201million
  • Additional £22m into early stage start ups with total commitments now £101 million
  • Pemberton funds approaching €3 billion committed AuM across all funds

All figures correct to 30.06.18

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