12Oct16 - Housing in an Ageing Society

Housing in an Ageing Society

Wednesday 12th October 2016

This event is kindly hosted by#has16

Welcome

Baroness Sally GreengrossChief Executive

International Longevity Centre - UK


Sally RandallDirector, Housing Standards and Support,

Department for Communities and Local Government


Nigel WilsonGroup Chief Executive

Legal & General


EXCELLENT EXECUTIONAROUND OUR FIVE KEY GROWTH DRIVERS

•Legal & General Group plc•Half Year results – 9 August 2016

2016

2016

Legal & General Group plcOctober 2016

LEGAL & GENERAL

Media City, Salford 2015

A MODERN GROWING BUSINESS

Our Vision: In a Complex World, We are a Simple Business

We are one of the ten largest asset managers in the world and a leader in financial solutions, trusted by over 10m customers. We

make a promise to our customers that we will support their critical financial decisions.

We integrate the pooling of risk with long term investments, this not only generates attractive returns for customers and investors, but

also addresses some of the greatest challenges facing society including: pension solutions, protection, urban regeneration and

housing.

2

SECOND MACHINE AGE: L&G: providers of today’s capital, engaging with customers to accelerate digital capabilities. Big Data, Artificial Intelligence, Deductive Analytics, Cloud.

Legal & General: From 1830’s cyberpunks to investors in and creators of digital cities

• FinTech has disappointed to date

• Digital capabilities have to accelerate

Ada Lovelace: First Female Actuary

First Machine Age: Babbage Difference Engine

Globally Trusted & Respected Brand

Peer-to-Peer

FIRST MACHINE AGE: L&G: formed in a coffee shop in 1836 as a UK Peer-to-Peer company using big data.

3

MARCH 2016 8

We are a focused, high performing business aligned to key long term structural growth drivers

As monetary policy takes front and centre stage, is the global macro economy moving to a digital world of zeros?

DownsideAnalogue Economy

Paper Money% change

Digital EconomyDigital Money

% change

Economic growth 2 - 4 0

Productivity 2 - 3 0

Nominal interest rates 4 - 6 0

Real interest rates 2 - 3 0

Inflation - Normal- Hyper

3 – 1010 – 30 0

Wages - Nominal- Real- Hyper

4 – 62 – 3

10 – 300

Currency Fixed with “crashes” Volatile

“We cannot solve our problems with the same thinking we used when we

created them.” Albert Einstein

Declining interest rates, have not resulted in increased investmentMoney printing has not resulted in increased inflation

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UK ageing population

ONS: UK 2014-based National Population Projections

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Are we “accurately” predicting key trends?

Years

Key Trends

• Longevity • Mortality

• Workplace stress and depression

• Suicides

Increase in Life Expectancy at Age 65

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Legal & General’s increasing role in an ageing societyWorking age Retirement

Saving and insurance Income for retirement Housing wealth

Low cost investments and platforms

DB pension Lifetime mortgage

Investment in infrastructure to boost local jobs and

growthDC pension Affordable housing

Protection to pay: ill health and death Secondary annuity market Retirement homes

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The Legal & General view:Ten steps we are taking in the housing market

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1. Mortgage Club £50b origination in 2016

2. Surveying 450,000 in 2016

3. Cala Homes (Build to Sell) £600m plus revenue in 2016

4. Private Rental (Build to Rent) 1000 units “in the hopper”

5. Retirement Homes Enter in 2017

6. Lifetime Mortgages £500m year 1 target in 2016

7. L&G Community Homes 4,000 acre land bank

8. Modular construction Entering in 2017

9. Affordable Housing Significant growth

10. Household Insurance £350m premiums in 2015

Is the actuarial challenge to work alongside Artificial Intelligence?

Our capability (science) has to improve. We have to develop critical commercial solutions

- Long Term Care

- Segmented Housing – Intergenerational unfairness

- Lifetime Mortgage - £5b market by 2020?

- DB and DC Pensions (accumulation and decumulation) – Costs too high?

- Critical Illness – Inadequate cover?

- Wearable Devices - Big Data Analytics

- Life Insurance

- Rainy Day Savings – “deadline to the breadline”

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We need to understand disease, disability and longevity trends in an ageing population

Legal & General’s contribution Insurance capability

Pension risk transfer & annuities

Health, diseases and longevity

Secondary annuity market Diseases and mortality trends

Lifetime mortgage Care needs and longevity

Affordable housing Diseases and disability to inform design of houses and environment

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Longevity trend: Fall in historical mortality rates largely due to circulatory diseasesAge standardised mortality rate for ages 60-89, males in England & Wales, by cause of death group, 1970-2013.

Source: Willets, Longevity Bulletin (2015)

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Understanding drivers of coronary heart disease (CHD) mortality by socio-economic status

• Sponsored the IMPACT Model in collaboration with University College London.

• Understanding drivers of mortality inform our mortality projections• For heart disease, the rate of decline in CHD mortality rates has been

fastest for the most affluent quintile of the population• Obesity and diabetes which have risen in the deprived group, dampening

improvement in death rates

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Understanding multi-morbidity by socio-economic status

• Most of our customers are in or will reach age 70 and above, having two or more diseases concurrently

• Multi-morbidity is a predictor of disability and dependency• We collaborate with University College London to study multi-morbidity by

socio-economic status at higher ages

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Good situational analysis: Need to develop commercial solutions

Life expectancy at age 65 with and without multiple morbidity, by deprivationMales Females

Least dep 2 3 4 Most dep0

5

10

15

20

Healthy 1 disease2 diseases 3+ diseases

Least dep 2 3 4 Most dep0

5

10

15

20

Healthy 1 disease2 diseases 3+ diseases

Source: Bajekal, Chan, Pujades et al: Multimorbidity Project

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Gap in life expectancy with increasing morbidity- Males, Quintile 3 (mid-deprived)

Gap in life expectancy by number of diseases

Source: Bajekal, Chan, Pujades et al: Multimorbidity Project

• Gaps are large: those with 3 or more diseases at age 45 can expect to live 8.5 fewer years than those with no chronic disease.

• The knowledge can use used to inform our assumptions for our customers’ life expectancy.

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Receipts from student accommodation are helping to fund pensions.

BUILDING INTERGENERATIONALCOMMUNITIES.

Pension funds are financing the building of student accommodation.

BUILDING BRITAIN21

BUILDING INTERGENERATIONALCOMMUNITIES.

Last Time Buyers rightsizing, freeing up family homes.

BUILDING BRITAIN22

2016

LEGAL & GENERAL

Central Square, Cardiff

A MODERN GROWING BUSINESS

Legal & General Group plcOctober 2016

Dr Brian BeachResearch Fellow

International Longevity Centre - UK


The International Longevity Centre-UK is an independent, non-partisan think-tank

dedicated to addressing issues of longevity, ageing and population change.

Housing in Later Life

Dr Brian Beach, Research Fellow

International Longevity Centre – UK

@ilcuk



Primary Themes of Housing in Later Life

Downsizing Housing with Care New Models of Later Life Living Home Adaptations



Perspectives on Downsizing



Specialist Retirement Housing



Home Adaptations By age 90+ over 70% live in homes with adaptations

compared to around 50% aged 50-54.– Amongst those that have had adaptations,

bathing/shower adaptations and hand rails are the most common adaptations.

Approximately 87% of those in retirement housing have home adaptations, by comparison to around 60% of those living in other housing.

Outright owners are more likely to be living in homes with adaptations than any other groups – particularly private renters and owners with a mortgage.



Thinking Ahead…

Lingering questions on affordability and supply Recognising varied needs and aspirations

– Develop a clearer picture of diversity in later life to identify priority areas

The need for a life course perspective– Policies designed to address later life housing

needs today may have less relevance in the future for current younger generations



Many thanks!

Dr Brian BeachResearch FellowInternational Longevity Centre – UK (ILC-UK)[email protected]

+44 20 7340 0440Twitter: @ilcuk

Housing in an Ageing Society

Wednesday 12th October 2016


12Oct16 - Housing in an Ageing Society

Presentations & Public Speaking

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