Legal & General boosts operating profit to £2.1bn
Insurance giant Legal & General (L&G) today said it had increased operating profit 12 per cent to £2.1bn, up from £1.9bn the previous year.
The company said operating profit from continuing divisions in 2019 was up 17 percent to £3.5bn, compared to £2.1bn the previous year.
Earnings per share increased 16 per cent to 28.6, up from 24.7p.
The company said pension risk transfer sales increased to £11.4bn last year compared to £9.1bn in 2018.
Finance chief Jeff Davies said he expected deals to continue at the same rate in 2020.
Return on equity fell from 22.7 per cent to 20.4 per cent.
Full year dividend increased seven per cent to 17.5p per share, up from 16.4p.
L&G’s solvency II operational surplus generation rose nine per cent to £1.6bn, up from £1.4bn.
Its solvency II coverage ratio of was 184 per cent, down from 188 per cent.
Davies said recent market movements caused by the growing worldwide fears of a coronavirus pandemic had knocked “around 10 per cent” from its solvency ratio.
Davies said L&G was not heavily exposed to areas that have been hit hard such as airlines, but said the company was examining the macro-economic risks caused by the spread of the virus.
“We prepare and plan for a whole range of different scenarios in terms of mortality and the markets,” he said.
“We have very minimal exposure, it is much more the big macro view, what is going to happen to interest rates, the general level of markets, corporate spreads,” he added.
Panmure Gordon analyst Barrie Corns said: “Whilst the financial impact of the coronavirus outbreak remains uncertain, corporate bond default reserves have remained virtually untouched throughout previous financial crises.”
Chief executive Nigel Wilson said: “Legal & General’s strategy of inclusive capitalism, underpinned by structural growth drivers, has enabled us to achieve our five year EPS growth ambition in four years, growing 58 per cent since 2015.
“Our five growing, profitable and increasingly international businesses compete in attractive, growing markets and work together to deliver economically and socially useful customer solutions. Society’s increasing focus on net zero carbon, ESG investing and levelling up through investment in all regions plays to our strengths, creating future growth opportunities.
“Having delivered EPS growth of 16 per cent to 28.7p, dividends up seven per cent to 17.57p, and a 20 per cent plus ROE, we are well-positioned for the future and we remain ambitious.”
Corns said: “We see the dividend as being supported by a combination of strong balance sheet, cash generation and potential further mortality releases.”
Last May, L&G agreed a £242m deal to sell its general insurance business to German insurer Allianz for £242m.