INSURANCE giant Legal & General (L&G) saw its shares plummet yesterday after it reported a 92 per cent slump in statutory profits, thanks to a one-off hit on the corporate bond portion of its investment portfolio.<br /><br />Shares of the firm fell by eight per cent after it issued the half-year results, before rallying slightly to a close of 62.15p, a 4.75 per cent fall on the day.<br /><br />The group also announced it was cutting its dividend by 45 per cent to 1.11p per share in a bid to conserve cash and boost its capital cushion. <br /><br />The group said under the statutory method of insurance company reporting its profits were just £31m in the six months to the end of June, compared to £391m in the same period last year. Analysts had been expecting a profit of £248m on average.<br /><br />L&G said the profit fall was driven by £359m in “negative investment variances”, including losses on the sale of some of its corporate bonds as well as a deficit of £206m after a foreign-exchange hedging programme went wrong.<br /><br />Under the European Embedded Value reporting method, which takes into account future returns from insurance underwriting, first-half underwriting profits rose by 12 per cent to £657m compared to the first half of last year, beating analyst expectations of £466m. <br /><br />“These one-off effects obscure what was otherwise a very solid set of results,” said Nomura analyst Nick Holmes. <br /><br />“In the short term the share price may suffer from the accounting opacity which affects the whole insurance sector.”<br /><br />The group reassured on its capital buffers, after cutting the dividend to further hoard cash, stating its regulatory surplus has now risen to £2.2bn, up from £1.5bn in March.