Legal & General’s (LGEN) efforts to plough into the bulk annuity market came good during the latter part of 2018, with a surge in transactions making up for a more subdued first half. The life insurer wrote a record £9.1bn in bulk annuities across 40 deals, more than double the value in the prior year. What’s more, the group has written £1.3bn so far this year and is quoting on a further £20bn of transactions.
Mortality releases of £433m, up almost a third on the prior year, boosted operating profits by a consensus-beating 14 per cent. Yet excluding those releases, operating profits at the core retirement division were up almost a quarter, with the retail business generating the largest rise. Individual annuity sales rose by nearly a fifth, while lifetime mortgage advances were up by the same proportion to £1.2bn.
Expectations are high, so a 9 per cent rise in new business surplus to £170m was still a third lower than market consensus expectations. This was primarily due to increased competition within the UK retail protection market – which has eaten into margins – with the general insurance business reporting a new business strain of £22m, compared with a £2m surplus in 2017.
The investment management arm gained £45.2bn in net inflows, which helped boost assets under management by 3 per cent to $1.02 trillion. Despite market volatility during the first and fourth quarters, management fee revenue was up 4 per cent to £813m.
Analysts at Numis expect 2019 adjusted pre-tax profits of £2.43bn and EPS of 33.4p, against £2.47bn and 33.7p in 2018.
| LEGAL & GENERAL (LGEN) | ||||
| ORD PRICE: | 274.7p | MARKET VALUE: | £16.4bn | |
| TOUCH: | 274.5-274.7p | 12-MONTH HIGH: | 288p | LOW: 222p |
| DIVIDEND YIELD: | 6.0% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 144p | SOLVENCY II RATIO: | 188% | |
| Year to 31 Dec | Gross written premiums (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 10.2 | 1.41 | 16.7 | 11.25 |
| 2015 | 6.3 | 1.41 | 18.2 | 13.4 |
| 2016 | 10.3 | 1.52 | 19.7 | 14.35 |
| 2017 | 7.9 | 2.06 | 30.5 | 15.35 |
| 2018 | 13.3 | 2.10 | 29.7 | 16.42 |
| % change | +68 | +2 | -3 | +7 |
| Ex-div: | 25 Apr | |||
| Payment: | 06 Jun |
