Thursday, September 19, 2024

Legal & General profit tops forecast, helped by annuity sales

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By Carolyn Cohn

LONDON (Reuters) -Legal & General reported a 1% rise in first-half core operating profit to 849 million pounds ($1.1 billion) on Wednesday, exceeding analyst expectations, following record sales of individual annuities over the period.

The British life insurer and asset manager, which is currently in the throes of a major business overhaul led by new CEO Antonio Simoes, sold 1.2 billion pounds of individual annuities in the first half, more than double the previous year.

Higher interest rates have made individual annuities, which pay pensioners a fixed income for life, more attractive.

Analysts had predicted core operating profit of 834 million pounds, according to a company-compiled consensus forecast.

L&G said it continued to expect 2024 core operating profit to increase by a mid-single digit percentage year-on-year and was pushing ahead with a 200 million pound share buyback.

“We are well under way with our strategy to create a simpler and better connected business, focusing on growth,” Simoes told a media call.

The former HSBC high-flyer, who joined L&G this year, announced a merger in June of two of the insurer’s key investment units, Legal & General Investment Management (LGIM) and L&G Capital.

However, assets under management at L&G, one of the biggest investors in the UK stock market, fell 3% in the first half to 1.14 trillion pounds.

External net outflows of 28.5 billion pounds reflected adjustments at many UK defined benefit pension schemes over the half year, as a result of improved funding ratios, L&G said.

L&G said it would pay an interim dividend of six pence per share, up 5% and in line with forecasts.

Its shares were up 0.3% at 0739 GMT, versus a 1% rise in the FTSE 100. JPMorgan analysts described the results as “strong”, reiterating their “overweight” rating on the stock.

($1 = 0.7872 pounds)

(Reporting by Carolyn Cohn; Editing by Sinead Cruise and Mark Potter)

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