UK INSURER Legal & General boosted its divided by 24 per cent yesterday on the back of a £1bn operating profit, and said it expected to benefit from stronger demand for savings products in future as reduced welfare provision forces consumers to save more.
Though operating profits fell slightly from £1.1bn in 2009, they remained broadly in line with analyst expectations of £1.05bn.
Sales for 2010 also jumped at the UK’s fourth largest insurer, climbing 28 per cent to £1.8bn from £1.4bn in 2009.
Chief executive Tim Breedon said the company was confident about its growth prospects, citing rising customer demand in the UK and a business model and product mix suited to the current economic and demographic environment.
“Our balance sheet is strong, each of our business divisions is profitable and cash-generative, and we are delivering excellent results across the group,” he said.
The insurer also renewed its seven-year partnership with Sainsbury’s Finance yesterday, which will see the supermarket chain’s financial outlets continue to sell L&G life cover products.
Despite the upbeat outlook, shares in L&G fell more than two per cent in early trading, before recovering slightly to close 0.4 per cent down at 110.7p.
The stock is up 12 per cent since the start of the year, outperforming a 1.6 per cent rise in the Stoxx 600 European insurance index.
Financial Services Authority chairman Adair Turner cast a shadow over the insurance industry in his prudential risk outlook yesterday, claiming that though well capitalised, the industry was exposed to balance sheet stress from both a rise in claims and low investment returns.