L&G looks to new climes as profit returns

LEGAL & General is casting its eyes to emerging markets for more joint ventures after a forecast-smashing set of final results saw the insurer swing back into the black.

The group delighted investors with a surprise 33 per cent boost to its final dividend, which brought the total payout to 3.84p. Higher mortality rates and a pick-up in performance at L&G’s fund management division helped produce a £1.2bn pre-tax profit under IFRS accounting, an improvement on last year’s £2.2bn loss.

Chief executive Tim Breedon told reporters the boom in the company’s cash generation, which more than doubled to £699m, would help fund more bancassurance joint ventures overseas. Breedon said there was no focus on a specific region but “we’re looking for bancassurance in any market we can make money in”.

He hopes to repeat the success of L&G’s existing tie-ups with local lenders in India and the Gulf.

But in a thinly-veiled dig at rival Prudential, which is planning a $35.5bn (£23.6bn) merger with American International Assurance in the Far East, Breedon ruled out any large acquisitions.

“What we don’t need to do is transformational M&A. We like start-ups overseas because you know what you’re getting, and we don’t like other people’s legacies,” he said.

L&G saw sales fall seven per cent in 2009, but cut annual expenses by £69m. Breedon said the company would continue its transformation into a lower-cost, capital-light model.

L&G’s investment management arm is the biggest institutional shareholder in the UK, with £175bn of assets in index tracking funds.

The company slashed its dividend by 50 per cent during the financial crisis in 2008.