KPMG will take over as external auditor for the financial year ending 31 December 2018. PwC has held the Legal & General audit since 1985 and this forced the FTSE 100 company to conduct a complete audit tender in order to meet with new regulatory requirements curbing audit tenures to a maximum of 20 years.

The audit was last tendered in full in 2006 with a partial re-tender process in 2009. PwC was not invited to re-tender given the duration of its tenure to date.

The annual audit is worth £4.9m in audit fees, with an additional £4.4m in audit-related and non-audit fees, totalling £9.3m. The latter represents 35% of total fees, comfortably below the EU non-audit services cap of 70%. In the latest annual report, Legal & General confirmed that they asked a range of audit firms including the Big Four and mid-tier to tender for the business and short-listed firms had to complete a detailed Request For Proposal (RFP).

In line with changes to the UK Corporate Governance Code and recently introduced EU Audit Regulation and Directive (ARD), the company had to review the 31-year audit engagement as it exceeded the 20-year rule which came into force in June 2016.

In a statement to the London Stock Exchange, Legal & General said: ‘The scheduled change follows a tender process carried out during 2016, as previously announced in the group's 2015 annual report & accounts.

‘This process has ensured that Legal & General is in compliance with legislation and has taken into account FRC guidance on best practice, in particular ensuring the independence of potential audit firms.’

A resolution to approve the appointment of KPMG will be put to shareholders at the company's AGM in 2018.

KPMG will have observer status over the 2017 audit to ensure an efficient transition while the incumbent, PwC, will conduct the final audit for the financial year ending 31 December 2017.

Adrian Stone, KPMG head of audit, said: ‘We are delighted to have been selected for this prestigious audit. This is testament to our commitment to audit quality and sector expertise together with the team’s hard work, passion, energy and enthusiasm.’

The Legal & General audit win comes on the same day as the announcement that Rolls-Royce was to end its 16-year relationship with KPMG following a decision to move its audit to PwC following a competitive tender.

In a statement, Legal & General ‘acknowledged the strong contribution PwC has delivered as the company's auditors over its many years of service’.

The chair of the audit committee is Philip Broadley, who replaced Julia Wilson in July 2016. She remains as a senior independent director at Legal & General and a member of the audit committee.

Broadley has extensive insurance experience having spent over 14 years in senior roles in insurance including as group finance director at Old Mutual plc and prior to that as group finance director of Prudential plc. He currently serves as a member of the Oxford University audit and scrutiny committee and is a member of the code committee of The Takeover Panel as well as the panel's finance committee.