Growing consumer confidence and a solid investment performance helped Legal & General (LGEN) to deliver record profits last year. Bolstered by net inflows of £17bn, assets under management grew 11 per cent to £450bn.
Operating profits on an IFRS basis were up 7 per cent at £1.16bn, while on an embedded value basis last year's negative economic variances of £195m were turned into a £215m positive contribution, pushing operating profits up 29 per cent to £1.34bn. The general insurance side was equally impressive, and the combined ratio of claims to premium income fell from 95 per cent to a healthier 84 per cent.
The group generated 16 per cent more net cash than in 2012, helped by a reduction in the cost of writing new business from £93m to £40m. The percentage of generated cash paid as dividends also edged up, from 87 per cent to 88 per cent. On the product side, one growth area of special note was bulk annuities, where premiums jumped 180 per cent to £2.8bn. Individual annuity sales were meanwhile steady at £1.3bn against the backdrop of a declining market.
Prior to these figures, J.P. Morgan Cazenove was forecasting embedded value per share of 168p at the year-end.
| LEGAL & GENERAL (LGEN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 235p | MARKET VALUE: | £13.9bn | |
| TOUCH: | 234-235p | 12-MONTH HIGH: | 245p | LOW: 158p |
| DIVIDEND YIELD: | 4.0% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 95p | EMBEDDED VALUE: | 162p | |
| Year to 31 Dec | Gross life premiums (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 5.28 | 1.07 | 14.8 | 3.84 |
| 2010 | 5.35 | 1.09 | 14.1 | 4.75 |
| 2011 | 5.72 | 0.95 | 12.4 | 6.4 |
| 2012 | 5.67 | 1.21 | 13.8 | 7.65 |
| 2013 | 6.16 | 1.32 | 15.2 | 9.3 |
| % change | +9 | +9 | +10 | +22 |
Ex-div:23 Apr Payment:04 Jun | ||||
