Risk Reward Update

Research evidence excerpt

Risk Reward Update

UpdateM

Risk Reward – Legal and General (LGEN.L)

KEY EARNINGS INPUTS

Drivers Dec 2025 Dec 2026e Dec 2027e Dec 2028e

Institutional Retirement CSM release

7.2 7.1 7.1 7.1

(%)

Retail CSM release (%) 10.0 10.0 10.0 10.0

INVESTMENT DRIVERS RISKS TO PT/RATING MS ESTIMATES VS. CONSENSUS

Solvency II balance sheet strength RISKS TO UPSIDE FY Dec 2027e

Credit spreads Continued strong sales of bulk annuities in the 26.8 UK bond yields UK and in International EPS

Flows into investment management unit Stronger than anticipated net inflows in asset (p) 21.0 33.7

Dividend growth management and workplace 26.2

Tightening of market credit spreads

GLOBAL REVENUE EXPOSURE RISKS TO DOWNSIDE DPS 22.7

22.2 22.8

APAC, ex Japan, Mainland Sharply wider credit spreads (p) 0-10% 22.6

China and India Lower bond yields negatively impact Solvency

0-10% Europe ex UK II capital

0-10% MEA Competitive pressures in the UK bulk annuity 1,490 Net income

90-100% UK market 1,112 1,559 (£, mn)

1,326

Source: Morgan Stanley Research Estimate

View explanation of regional hierarchies here OWNERSHIP POSITIONING

Mean Morgan Stanley Estimates

Inst. Owners, % Active 59.1% Source: Refinitiv, Morgan Stanley ResearchMS ALPHA MODELS

HF Sector Long/Short Ratio 2.2x

4/5 3 Month HF Sector Net Exposure 18.6%

MOST Horizon

Refinitiv; MSPB Content. Includes certain hedge fund

Source: Refinitiv, FactSet, Morgan Stanley Research; 1 is exposures held with MSPB. Information may be

the highest favored Quintile and 5 is the least favored inconsistent with or may not reflect broader market

Quintile trends. Long/Short Ratio = Long Exposure / Short

exposure. Sector % of Total Net Exposure = (For a

particular sector: Long Exposure - Short Exposure) /

(Across all sectors: Long Exposure – Short Exposure).