Legal & General shrugs off post-Brexit economy fears

Insurer Legal & General said it believed Brexit will have little impact on its business as it posted a 23 per cent rise in profits for the first half of the year.

L&G is the joint owner of Edinburgh's Cala Homes. Picture: Contributed
L&G is the joint owner of Edinburgh's Cala Homes. Picture: Contributed

The firm said pre-tax profits rose to £826 million, flagging that it was able to keep its property funds open during a post-vote meltdown which saw a number of others shut down temporarily.

The company also highlighted the contribution from Edinburgh-based housebuilder Cala Homes, which it owns together with Patron Capital Partners, and which has seen record annual sales and profits. Eamonn Flanagan of Shore Capital said it was a “strong underlying performance” for the group.

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Legal & General said: “There are a range of different views amongst market commentators regarding the potential impacts of the recent EU referendum result on the wider economy, and this in turn has created greater market volatility which we expect to continue for some time.

“Although no business model can be immunised against slowing global economic activity, the opportunities available to the group should remain largely unchanged and we will strive to execute our strategy successfully to deliver profitable growth.”

The group’s net cash generation was up 16 per cent to £727m, with its retirement division seeing profits rise 44 per cent to £406m during the period. Following the referendum result, Legal & General said in June that it was ready for any Brexit fallout after the firm planned for a 50-50 probability of a Leave vote.

“The group took a cautious stance in the run-up to Brexit which will deflate cash generation in the short term but, with hindsight, this was an appropriate course of action.”