Legal & General profit rises as global annuity sales hit record
By Michele Maatouk
Date: Wednesday 07 Aug 2019
(Sharecast News) - Legal & General reported an 11% jump in first-half operating profit and a 12% increase in pre-tax profit on Wednesday as it achieved record global annuity sales.
Operating profit rose to £1.0bn in the half from £909m in the same period a year ago, while pre-tax profit pushed up to £1.05bn from £942m, as global annuity sales hit £7bn.
Assets under management at the insurer rose 15% to £1.14bn. Earnings per share picked up 13% to 14.74p and the interim dividend was boosted to 4.93p per share from 4.60p a year earlier.
L&G said that the UK - its primary market - is the most mature but still represents "an enormous opportunity" as only about 8% of the £2.2 trillion of UK defined benefit pension liabilities have transferred to insurance companies.
"UK pension advisers estimate more than £60bn of demand for bulk annuities within the next two years and they expect that number will continue to grow, against circa £30bn of annual insurer capacity," it said. The company said it has a strong UK pipeline, actively quoting on more than £20bn of transactions, having already completed a further £923m of new UK pension risk transfers last month.
Chief executive Nigel Wilson said the company's five business had collectively delivered "another strong set of results".
"Our balance sheet remains strong. We have a globally diversified asset portfolio with minimal exposure to UK sub-investment grade credit and a £3.2bn credit default reserve. H2 has started well, building on the success of our H1 transactions including the circa £4.6bn Rolls Royce pension risk transfer, £4bn Oxford University Future Cities deal and circa $50bn Japanese global index win."
Wilson added that the group is "well-prepared for the full range of foreseeable Brexit outcomes".
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