Pensions and insurance giant Legal & General's shares are today the biggest fallers of the FTSE 100, despite the company revealing a boost to its pre-tax profits.
Legal & General announced a profit before tax attributable to shareholders of £826m, an increase of 23 per cent. Despite this, shares are currently down 4.9 per cent at 207.5p.
However, hidden within the figures was a sizeable drop in profits in its insurance division, caused by a negative investment variance of £92m, compared with £48m in the same period the year before. The financial services firm blamed volatile markets caused by June's referendum as the reason for the poor performance.
"Volatile financial markets can be tricky for banks and insurers in the short term, since many of their assets are linked to market investments," said Nicholas Hyett, equity analyst at Hargreaves Lansdown. "Legal & General appear well set with their focus on long term structural growth opportunities. However today's mix of earnings will be a little disappointing for investors."
Chris Beauchamp, senior market analyst at IG, added chief executive Nigel Wilson's inability to turn his frown upside down in his statement may have also led investors to exercise caution.
In his results statement, Wilson 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.
An XTB online trading note pointed out: "It should be noted as a word of caution, that with Theresa May announcing she doesn't intend to trigger article 50 and begin the formal process of a Brexit for the foreseeable future the trading environment will remain uncertain for the insurance company."