|
Legal & General Group PLC on Wednesday reported core operating profit above expectations, driven by a surge in its UK pension business. The London-based life insurance provider said pretax profit rose 7.9% to £476 million for the half-year that ended June 30 from £441 million a year earlier. Core operating profit grew 6.2% to £859 million from £809 million, ahead of company compiled consensus of £816 million. Core earnings per share increased 8.6% to 10.94 pence from 10.07p, ahead of 10.50p consensus, and towards the top end of L&G’s targeted range of 6% to 9% growth. Despite the profit beat, shares in L&G were down 3.0% to 253.68 pence each in London on Wednesday morning. They have risen 17% in the past 12 months. Pretax profit for L&G’s Institutional Retirement unit jumped 37% to £400 million from £291 million, while profit in its Asset Management division fell 51% to £78 million from £159 million. In Retail, it advanced 1.9% to £163 million from £160 million. Chief Executive Antonio Simoes said: ‘Institutional Retirement operating profit is up double digits, and we have written over £5 billion of new business at low capital strain. We have seen material progress in Asset Management, with positive annualised net new revenues driving a further increase in our average revenue margin, which is now close to our double-digit ambition. In Retail, our customer base has grown to 12.4 million, and workplace pension assets have surpassed £100 billion’ L&G said Institutional Retirement wrote £3.4 billion of global pension risk transfer business in the first half, more than double last year’s £1.5 billion, and said its pipeline remains strong. L&G expects UK PRT market volumes of £40 billion to £50 billion in 2025. The firm said Institutional Retirement is ‘seizing the opportunity’ presented from another year of high demand for PRT, having already completed or in exclusivity on £5.2 billion of transactions globally this year. Pension risk transfer is where firms pay insurers to take on their financial obligations. ‘In the UK, we are actively pricing on or have visibility of £42 billion of new deals that we expect to transact in the next 12 months, of which 9 deals are greater than £1 billion,’ L&G said. ‘We expect strong volumes this year, with good profitability and low new business strain. Profit generated from back book optimisation has increased over H1 and we expect this to be sustainable over the medium term.’ L&G declared an interim dividend of 6.12 pence per share, up 2.0% on-year from 6.00p. It said 90% of the £500 million buyback announced at full-year results is now completed. In Retail, L&G expects increased annuity sales in the second half of the year despite higher competition. Solvency II capital generation was £729 million, up 3% on-year, and Solvency II coverage ratio was 217%. This compares to consensus for £705 million and 220%, respectively. L&G said the Solvency II coverage ratio excludes 6% in respect of the temporary impacts from non-retained US business that will will unwind when the transaction completes. Looking ahead, Legal & General said it continues to expect full-year core operating earnings per share growth within its three-year target range of 6% to 9%. In the medium-term, the company is targeting a more than 20% operating return on equity between 2025 and 2027. CEO Simoes said the outlook for the business is ‘positive and we are firmly on track to achieve our financial targets’. Copyright 2025 Alliance News Ltd. All Rights Reserved.
|
