Legal & General share price falls as company reveals wobbles with insurance despite growing profits overall
Legal & General slumped to the bottom of the FTSE 100 this morning, despite reporting an increase in profits.
The figures
The financial services giant revealed a profit before tax attributable to shareholders for the first half of 2016 of £826m, up 23 per cent on 2015's £672m.
However, hidden within that positive profit figure, insurance profit before tax reduced to £46m, a 66.7 per cent slide from the prior year's £138m, after a fall in government bond yields took its toll on investment variance.
Meanwhile, the group's Solvency II coverage ratio at the end of the half-year period was measured at 158%, down from the 169% reported at the end of the full year for 2015.
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Shares are currently down 5.6 per cent at 206p.
Why it's important
Banks are not the only ones to be having a tough time with volatile financial markets at the moment, as manic swings are also wiping chunks off of insurer's investment prospects. Although Legal & General's bottom line grew overall, the sharp dip in profits from its insurance division is bound to leave some investors wondering what to do.
What Legal & General said
Nigel Wilson, group chief executive, said:
There are many different views of the outlook for economic growth, the state of financial markets and political uncertainty. We reflect this in our approach to risk management. While we cannot be immune to this uncertainty, we remain confident that we will continue to deliver attractive returns for shareholders, great value to customers and better outcomes for society. Our five long-term growth drivers, ageing populations, globalisation of asset markets, creating real assets, welfare reform and digital remain unaffected and will continue to provide many growth opportunities.