Legal & General hits £1 trillion funds milestone

L&G is headed by chief executive Nigel Wilson. Picture: Contributed
L&G is headed by chief executive Nigel Wilson. Picture: Contributed
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Legal & General has become the UK’s first £1 trillion investment manager following a spate of infrastructure deals last year.

The group said alongside its annual results that money pumped into infrastructure, clean energy, commercial real estate and residential property across British cities by its investment arm and an increase in international assets helped it reach the landmark figure.

Legal & General Investment Management saw assets under management rise 3 per cent to £1.02 trillion.

Chief executive Nigel Wilson flagged the negative impact political uncertainty was having on asset prices, but nevertheless said L&G performed strongly.

He said: “2018 saw political uncertainty, asset market declines and slowing economic growth, but we are resilient and performed strongly.

“We became the UK’s first £1 trillion investment manager, executed a record £9 billion of pension risk transfer deals and invested billions in the UK’s future infrastructure and cities.”

Full-year figures showed that the FTSE 100 company saw operating profit rise 10 per cent to £1.9bn in 2018.

The firm said it was helped by customers dying earlier than expected, or what it called a “heavier than expected mortality experience in 2018”.

L&G released £433 million of cash reserves. Net profit fell 3 per cent to £1.83bn after the prior year was boosted by a one-off US tax benefit.

Legal & General booked record annuity sales of £10bn in its pensions business, while its insurance arm saw gross written premiums rise 3 per cent to £2.62bn.

In the US, protection saw new business annual premiums grow by 12 per cent and international assets jumped 13 per cent to £258bn.

“Our strategy positions us well despite the broader environment, our current trading is strong and we expect this momentum to continue in 2019,” Wilson added.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “The investment management business has passed the £1tn assets under management mark, with net inflows more than offsetting the negative market movements we’ve seen recently.

“The really important news though is that Legal & General continues to dominate the growing bulk annuity industry – with a 38 per cent market share in the UK – and that’s a potentially lucrative business over the longer term.”

Graham Spooner, investment research analyst at The Share Centre, noted: “Perhaps of more interest is the confident tone used by the CEO who stated current trading is strong and momentum is expected to continue over the year ahead. He states they are largely unaffected by the political situation.”