UK insurer Legal & General receives earnings boost from corporate pension deals


Share post:

Receive free Legal & General Group PLC updates

A buoyant annuities market helped Legal & General beat analyst expectations in interim results and boosted smaller rival Just Group, which said it was “highly confident of comfortably exceeding” its full-year profit guidance.

L&G, the FTSE 100 insurance and asset management group, posted first-half operating profit of £941mn, down 2 per cent year on year but beating consensus analyst expectations of £834mn.

Presenting his final set of results after more than a decade at the helm, which included better than expected solvency, Sir Nigel Wilson said L&G was on track to meet its five-year targets and had been “bolstered” by growing annuity sales.

In the period, the group did £4.9bn of UK corporate pension deals in which companies pay a bulk premium to offload their pension liabilities. In the second half, L&G has so far written £1.8bn and has agreed a similar amount of deals in the US since the end of June.

Analysts said the company had put up less capital against these deals than expected. “We have scope to write up to £11bn of UK [bulk annuity] volumes and for the UK annuity portfolio to be self-sustaining again in 2023, as it has been for the last three years,” L&G said.

Rising interest rates have lifted the funding levels of pension funds across the country and put many more in a position where they can do a deal with an insurer. The surge in market activity has raised questions about the insurance sector’s capacity to swallow all these schemes, and the regulator has called for insurers to exercise moderation in how much new business they take on.

However, rising interest rates also sapped L&G’s fund management arm, pulling the value of its assets under management down from £1.29tn in June 2022 to £1.16tn.

And the insurer fared less well in its UK protection business, with new business annual premiums falling from £85mn to £76mn in what it described as an “increasingly competitive market”. But its retail business was also “bolstered” by rising individual annuity sales.

Rival Just Group, the FTSE 250 life insurer, said in its interim results it was “highly confident of comfortably exceeding” its full-year operating profit target due to a buoyant market for individual and bulk annuity sales, both boosted by higher interest rates.

Just Group’s shares were modestly higher in early trading, while L&G’s were down by just over 3 per cent, amid a broader decline in UK blue-chip stocks.

Source link

Lisa Holden
Lisa Holden
Lisa Holden is a news writer for LinkDaddy News. She writes health, sport, tech, and more. Some of her favorite topics include the latest trends in fitness and wellness, the best ways to use technology to improve your life, and the latest developments in medical research.

Recent posts

Related articles

UN security council approves mission to fight Haitian gangs

The United Nations Security Council has authorised a security mission to fight gangs in Haiti, after a...

Senior NHS doctors offer to suspend strikes for pay negotiations

Receive free UK labour disputes updatesWe’ll send you a myFT Daily Digest email rounding up the latest...

EU nominee for climate chief wants global fossil fuel taxes

Receive free European Commission updatesWe’ll send you a myFT Daily Digest email rounding up the latest European...

IMF head backs reforms that could give China more voting power

The head of the IMF has backed reforms that could give Beijing more voting power within the...

Truss rally highlights rift between Sunak and the Tory right

A year to the day since Liz Truss’s first Conservative conference as leader imploded over her ill-fated...

Microsoft chief says Google default agreements make search choice ‘bogus’

Receive free Google LLC updatesWe’ll send you a myFT Daily Digest email rounding up the latest Google...

Donald Trump confronts New York fraud claims on first day of trial

Receive free Donald Trump updatesWe’ll send you a myFT Daily Digest email rounding up the latest Donald...

US Treasury yields hit 16-year high as bond rout resumes

Receive free US Treasury bonds updatesWe’ll send you a myFT Daily Digest email rounding up the latest...