Interim results from Legal and General show operating profits up five per cent to £909m and an increase of seven per cent in the interim dividend to 4.6p per share. The shares were trading gently better in early trading.
Commenting on the results, Steve Clayton, manager of the HL Select UK Income Shares fund:
“L&G is making steady progress, with five out of six divisions increasing their underlying earnings in the first half of the year. Growth prospects for the second half look good too, with L&G currently negotiating billions of pounds worth of new business. As always with L&G, the actual reported numbers reflect the impact of market returns on top of the underlying business performance. This year, market gains were less than the previous year, so reported earnings are actually down, but most investors will look through the noise to focus on a strong underlying performance.
“Part of L&G’s business is life assurance and in that line of business, good news for the company is bad news for the rest of us. The company expects to make a longevity reserves release of over £330m later this year, reflecting the fact that we’re not living as long as we were once expected to. Profits were flattered in the first half by a one-off £56m gain on the sale of the former L&G Savings business, and the group’s capital position improved to a Solvency II coverage ratio of 193 per cent .”
Overall, L&G look to be performing to plan. LG Investment Management funds under management are £985bn and look well set to reach a trillion pounds assets before too long. The group’s strength in pension risk management is allowing it to take on large mandates from pension funds where trustees are looking to manage their liabilities.