LIFE insurance giant Legal & General yesterday revealed a healthy rise in profits, driven by the increasing numbers of baby boomers buying annuities as they reach retirement age.
“An uncertain, sluggish economy has had minimal impact,” said chief executive chief Nigel Wilson. “The more important drivers for us are ageing populations, falling state spending on welfare and new long-term investment opportunities as banks retrench.”
Shareholders also cheered the news that L&G will increase its dividend by 20 per cent to 7.65p per share. Industry investors had feared that many large insurers would be tempted to follow the lead of RSA, who slashed its payout by a third last month in the face of low investment returns.
Wilson also suggested his company was ready to expand its operations in the US and Asia, as well as investing in bolt-on acquisitions for mature markets.
The company’s pre-tax profit rose three per cent to £1.09bn, with sales of annuities – which offer pensioners a guaranteed income until death – increasing 26 per cent to £132m.
However the company’s general insurance arm saw profits slip to just £30m. The division’s combined ratio – a measure of underwriting profit that compares the amount received in premiums with the money paid out in claims – also rose noticeably to 95 per cent.
Meanwhile FTSE 250 insurer Lancashire yesterday announced that chief underwriting officer Simon Fascione will be leaving the company after six years.