L&G sales up but capital fears persist

INSURER Legal &amp; General (L&amp;G) reported above-consensus first-quarter sales of &pound;382m yesterday and said the worst of the crisis appears to be over, but fears over the firm&rsquo;s capitalisation levels continued to dominate.<br /><br />L&amp;G revealed a 3 per cent global sales rise, from &pound;372m a year ago, which was massively bigger than analyst expectations of around &pound;319m.<br /><br />But Charles Stanley analyst Sam Hart said the firm&rsquo;s capital surplus at the end of the first quarter of 2009 was &pound;1.6bn, significantly lower than the &pound;2.9bn reported at the end of September last year. &ldquo;We believe that until a material improvement in the group&rsquo;s capital position is witnessed the stock is likely to remain in the doldrums,&rdquo; he said.<br /><br />L&amp;G&rsquo;s shares plummeted on the results statement, diving to 58.3p by the close of play &ndash; a 10.99 per cent fall.<br /><br />Group chief executive Tim Breedon cautioned that 2009 will be a difficult year, but he said there is &ldquo;greater confidence in markets that the worst of the financial crisis is behind us&rdquo;.<br /><br />L&amp;G also reported a 6 per cent boost in sales of savings products at its UK business, and a 32 per cent overseas sales leap, as the plummeting value of sterling made its products more attractive outside the UK.<br /><br />These sales boosts helped to offset a 10 per cent drop in new business at the firm&rsquo;s UK Risk arm, where it said it is continuing to diversify its products away from mortgages as the housing market remains difficult.<br /><br />Meanwhile, Lloyd&rsquo;s of London insurer Amlin posted a 39.2 per cent rise in gross written premiums to &pound;729.7m in the four months to the&nbsp;end of April, boosted by the strength of the dollar.<br /><br />The group said the trading environment has improved, reporting the average renewal rate increase was 4 per cent. It said investment returns were positive at 0.4 per cent.