Legal & General profits leap 34%

Published on Wednesday 4 August 2010 16:23

LEGAL & General, the UK's second-biggest life insurer by assets, raised its dividend by 20 per cent as it reported a jump in first-half profit yesterday.

The group said operating profit climbed 34 per cent to 542 million in the six months to 30 June, driven by an 18 per cent rise in worldwide new business to 881m, beating analysts' estimates. Net income swung to 402m after a 71m loss a year earlier. Tim Breedon, chief executive, said: "We are successfully executing our strategy to deliver healthy returns on capital and focus on cash generation."

Barrie Cornes, an analyst at Panmure Gordon, said: "Twelve to 18 months ago the capital position was hugely questionable. Now it's transformed, but the share price hasn't recovered."

The firm's capital reserves rose to 3.3 billion from 3.1bn a year earlier.

Profit at Legal & General Investment Management, the insurer's asset manager, climbed 32 per cent to 98m. Assets under management gained 18 per cent to 320bn amid higher demand for fixed-income funds.

Breedon said: "There is an increased appetite for saving. Customers are favouring safer products."

He added that the outlook for the firm's products was "mixed" into 2011 as conditions would favour UK savings and annuities but that there was "little evidence of recovery" in the UK housing market.