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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 strategy is driven by six global growth drivers. However, in the short and medium term, global political and economic factors create opportunities for growth and present risks which need to be managed.

Growth drivers

A coffee stall

Achieve market leadership in global pensions de-risking

Growth driver

Ageing demographics

Ageing populations mean that pension savings need to last longer. The number of people in the UK aged 75 and over is projected to rise to nearly 10 million by 2040.

Rationale

DB pensions are in crisis with an estimated £560 billion of private sector deficits exacerbated by low interest rates; and the ageing population, illustrated by the projected doubling of over 75s in the UK between 2015 and 2050.

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

  • 45% share of LDI market, worldwide market leader
  • Auto-enrolment boosts DC customers to 2.2m
  • Acquisition of £2.9bn UK Aegon annuity portfolio
  • £750m ICI pension buy-in

All figures correct to 31.12.16

A city next to water

Diversify by increasing assets and earnings internationally

Growth driver

Globalisation of asset markets

Global wealth assets exceed $70 trillion. Our share is around 1.5%, so we’re exporting more of our skills internationally.

Rationale

Global wealth assets exceed $70 trillion. We’re successful in the UK and the US, but we’ve just around a 1.5% share globally and we’re exporting our skills internationally.

What we do

We’re expanding our international businesses in the US, Europe, the Gulf and Asia, using our asset management and risk management skills.

Progress

  • $146.5bn AUM in the US
  • Four of top five US DB pension fund clients
  • Won US DC mandates
  • Second distribution agreement in Japan
  • International AUM of £177bn, up 45%

All figures correct to 31.12.16

A woman walking

Improve returns and change people’s lives by creating real assets

Growth driver

Creating real assets

There’s an urgent need to invest in infrastructure and urban regeneration. Pension assets need to be invested over the very long term and we can improve returns and benefit the economy by investing in this way.

Rationale

We seek to invest the group’s £54.4 billion pension annuity assets in higher performing risk-adjusted classes. Direct investments can offer better and more predictable returns to shareholders and can create economic benefits.

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

  • 45% share of LDI market, worldwide market leader
  • Auto-enrolment boosts DC customers to 2.2m
  • Acquisition of £2.9bn UK Aegon annuity portfolio
  • £750m ICI pension buy-in

All figures correct to 31.12.16

A child drawing with crayons

Drive earnings growth through a market leading insurance business

Growth driver

Welfare reforms

Many families that rely on state benefits struggle to survive financially following death, disability or long-term sickness. Greater use of private insurance can help to build financial independence.

Rationale

Many families will struggle to survive financially following death, disability or sickness. Company and individual insurance cover can safeguard financial independence.

What we do

We provide life insurance cover for death, critical illness and long-term sickness and disability for individuals and companies. We aim to work closely with government to provide better financial safeguards for consumers.

Progress

  • 26% share of individual life protection UK market
  • Retail protection direct sales up 7%, GI direct sales up 20%
  • Mortgage Club sold 1 in 5 UK mortgages
  • Top 10 player in US term life market with 1.2 million customers

All figures correct to 31.12.16

A couple taking a selfie

Build a truly digital business to drive efficiency and engage with customers

Growth driver

Technological innovation

Consumers are increasingly seeking digital access and low-cost solutions for financial services products.

Rationale

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

Our digital strategy for customers allows insurance customers to obtain quotes, apply for policies and review and renew them using mobile and digital technology. We're increasing efficiency in our admin operations through building low cost digital processes.

Progress

  • Sales of lifetime mortgages through our digital platform exceeded £600m
  • Investment/partnership with Fintech auto-enrolled pension provider
  • Low cost model, with average of 80% life insurance straight-through processing

All figures correct to 31.12.16

Children playing

Build economic growth and earnings by investing in Britain’s future

Growth driver

Today’s capital

In recent years, equity investment capital has been in short supply. Institutional funds need stable long-term returns. Investing in start-up businesses creates the companies of the future and stimulates economic growth.

Rationale

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

Our digital strategy for customers allows insurance customers to obtain quotes, apply for policies and review and renew them using mobile and digital technology. We're increasing efficiency in our admin operations through building low cost digital processes.

Progress

  • 26% share of individual life protection UK market
  • Retail protection direct sales up 7%, GI direct sales up 20%
  • Mortgage Club sold 1 in 5 UK mortgages
  • Top 10 player in US term life market with 1.2 million customers

All figures correct to 31.12.16

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