RETAIL Structured Solutions. You Have a Right to Expect Stability and Excellence from Product Providers

RETAIL STRUCTURED SOLUTIONS

RETAIL Structured Solutions. You have a right to expect stability and excellence from product providers. Since 1995 we have managed all aspects of structured products. This is the expertise we bring to We would really like to work with looking after over 250,000 customers. you and appreciate your feedback. This is not a consumer advertisement. It is intended for professional financial advisers and should not be relied Our team are always on hand to talk to you about your needs, with a dedicated upon by private investors or any other persons. Structured Solutions team to support your strategy and future goals. We appreciate that turbulent markets have meant that professional investors such as yourselves are keener than ever to work with a stable, established company, who can offer you the assurance you need.

CONTACT US Please contact your Legal & General representative or the Retail Structured Solutions team at [email protected]. Details of our latest products can be found at www.landgstructuredproducts.com

This document should not be taken as an invitation to deal in any Legal & General investment including the stated investment. If investors cash in any or all of their investment early then they may get back less than they invest.

Legal & General (Portfolio Management Services) Limited Registered in England No. 2457525 Registered office: One Coleman Street, London EC2R 5AA Authorised and regulated by the Financial Conduct Authority. CW4018 07/13 H142530 2 RETAIL STRUCTURED SOLUTIONS

Legal & General Group.

Legal & General is a leading provider of risk, savings thriving and that Legal & General’s double-digit sales and investment management products in the UK. growth in 2012 broke records again, demonstrating that customers value our insurance, savings and We have been around since 1836, the same year that investment propositions. London gained its first railway terminus and Charles Darwin returned to England with some new ideas. As well as being a successful business, we do our very best to think about the things that matter to Like the railways and the theory of evolution we too people every day, taking a stand on the issues that grew in popularity and currently we have over seven matter to us as a business, to our customers and to million customers in the UK, as well as operations broader society. internationally. We’re proud to say that the Group is

What do Legal & General RETAIL STRUCTURED SOLUTIONS do?

Customer facing: Legal & General Retail Structured Thoughtful design: With extensive experience in the Solutions are responsible for the plan management, structured product market, we’re adept at designing client servicing and marketing of Legal & General’s and distributing structured products that work for structured products. We offer structured both intermediaries and customers. We understand deposits and structured investments. the market and are constantly working with other financial institutions to ensure we have competitive Dedicated support: Our teams are here to support and fair value products available. customers throughout the life of the products, from the day the products start through to maturity. We’re also here to support intermediaries by giving you the tools you need to help your clients. RETAIL STRUCTURED SOLUTIONS 3

An overview of structured products.

Structured products are fixed term products, which Structured products can be useful financial tools pay a defined return at a set point in time. as part of a broader investment strategy. They can provide returns linked to different asset classes The return can be linked to one or more indices or for customers with different attitudes to risk and other assets, such as shares of a company. investment objectives.

Our products offer a variety of different returns within Structured products fit into two broad categories: different structures and tax wrappers. They also offer structured deposits and structured investments. different levels of capital protection.

How do Structured Deposits and Structured Investments differ?

Structured deposits Structured investments

Underlying structure Customers’ money is placed on Customers’ money is used to buy deposit with a deposit taker, who securities from a financial institution agrees to pay back the original deposit (usually a bank) which provides the plus the stated return. stated return.

How is it taxed? Subject to income tax unless Subject to income or capital gains tax purchased within a cash ISA wrapper. unless purchased within a stocks and shares ISA wrapper.

What are the risks of If the deposit taker can’t pay back If the securities provider can’t these products? what they owe then customers could meet their commitments then lose some, or all, of their original customers could lose some, or all, deposit and any applicable return. of their original investment and any The customer is covered by the applicable return. Financial Services Compensation For a Structured Capital at Risk Scheme (FSCS) up to their personal Product (SCARP), if the level of the allowance of £85,000. index used falls below a set level customers could lose some or all of their original investment. The customer is not covered by the FSCS in the event that the securities provider cannot meet their commitments.

How can it be bought? Investments can be made direct or Investments must be made through through a financial intermediary. a financial intermediary. As such, you are responsible for assessing appropriateness or providing full advice. 4 RETAIL STRUCTURED SOLUTIONS

Why CHOOSE US for Structured Solutions?

The Legal & General Retail Structured Solutions team is responsible for the development, design, administration and governance of our structured product range.

In-house management. We do this because we’re keen to keep control of all the elements, ranging from UK-based plan management to administration.

We’re here to stay. We’ve been in the structured product market since 1995 and we have successfully launched over 170 products to date. With over £4 billion in assets under administration and over 250,000 customers, we’re highly committed to the market and here to stay.

Product range. We offer both structured investments and structured deposits, whilst our strength in the marketplace allows us to offer products through a number of Independent Financial Advisers (IFAs), Strategic Partnerships, via our own business partners and Legal & General Financial Solutions sales force network as well as direct to consumers.

A leader in corporate governance. It is the size, scale and the flexibility of our business that allows us to negotiate with many leading financial institutions and offer quality products with fair value for customers.

How we design and develop our products.

Our products offer a variety of different returns within Each product has its own governance plan which different structures and tax wrappers. They also offer is reviewed and approved by the Product and Risk different levels of capital protection. Directors. Each product is then approved before launch by the Managing Director. In developing each structured product, we pay careful attention to: We have introduced a framework we call Product Lifecycle Management (PLM) for all products across • Assessing the target market the Legal & General Group. This framework has been • Product risk assessments implemented for structured products and a series of new policies have been introduced to ensure product • Stress testing launches meet the needs of the customer and provide • Design principles of the products enhanced governance for this product line. • Approving our counterparties PLM is supported by generic target market research, risk assessments and stress testing, which will be • Product structures/returns maintained independently of the individual products. • Approved indices/underlyings All products operate within a governance framework of approved policies relating to the design principles; • Fair value methodology counterparties; structures; indices; methodologies and delegated authorities.

Ongoing review.

We continually review our products from launch This approach helps us to ensure that our products right through to maturity. As well as monitoring are operating as customers expect. We also use this the counterparties, the indices and operational input to adapt and monitor future launches, and aim performance, we also keep a keen eye on any concerns to continually improve our customer service and the raised by our customers. customer journey. RETAIL STRUCTURED SOLUTIONS 5

What research do we do into the target market?

We regularly invest in research in order to ensure There remains a broad target market for structured that we always have products that are a good fit for products. The research demonstrated to us that your customers. structured products can contribute towards a range of customer needs including boosting retirement funds, We recently commissioned an extensive research investing for specified goals or general investment programme to identify the target market for our range of for growth. structured products.

How do we How do we manage our ensure fair counterparties? value?

Each counterparty is evaluated against high Legal & General will assess the fair value of standards. We take into account credit ratings approved return structures by reference to provided by third party agencies such as Standard past performance, forward forecasting and & Poor’s, Moody’s and Fitch. To evaluate these we reviewing product performance and likelihood use the approach followed by regulators such as of capital loss where applicable. the Federal Reserve (FED) and Financial Conduct Authority (FCA). This is called a CAMEL approach: Capital: Quality and quantum of capital Asset quality: Profile of loan book, including level of non-performing loans and loan-loss reserves Management: track record, depth of management team, risk management skills Earnings: net interest margin, earning composition, cost efficiency and loan losses Liquidity: liquid assets/total assets and wholesale funding ratio. Any new counterparties (deposit takers or securities providers) will be subject to initial approval by board level committees. We’ll also continue to review the counterparty throughout the lifetime of the product. Each counterparty is assessed and must receive ongoing approval. 6 RETAIL STRUCTURED SOLUTIONS

What Support Services do WE provide?

Advisers Clients

At launch

Key Features (printed and download) ✓ ✓

Application forms (printed and download) ✓ ✓

Commission disclosure sheets (structured deposits only) ✓

Product profiles ✓

During product lifetime

Annual statements ✓ ✓

Barrier breach notifications (SCARPs only) ✓ ✓

Latest credit rating information ✓ ✓

Current valuations for early withdrawals ✓ ✓

At maturity

Warm-up mailings for all maturing products ✓ ✓ including early kick outs

Maturity mailings (including client listings for advisers) ✓ ✓

Literature telephone support

Making life easy for you and your clients is important to We have a dedicated team based in Cardiff, which us. We commission external, independent research to administers Legal & General’s structured products help ensure that our literature clearly explains the risks and retail unit trusts. We have an efficient processing and features of our products. centre with dedicated operational teams. We also offer comprehensive support to you at maturity, to give you Communications the tools to help your clients make an informed choice when their structured product closes. Throughout the lifetime of the product we will provide regular information in a clear and understandable format. At maturity, or early maturity, we have a robust communication process to help you and your client understand the available options. 2 RETAIL STRUCTURED SOLUTIONS

Legal & General Group.

What do Legal & General RETAIL STRUCTURED SOLUTIONS do?