L&G sales flat but cash rises

RETIREMENT and insurance group Legal & General yesterday reassured investors with a bigger than expected figure for its cash generation so far this year, despite sales of products such as annuities staying flat.

L&G said it added £25bn of new funds to its asset management arm in the first nine months of the year, while cash generation jumped 17 per cent to £736m compared to a year earlier.

The solid figures were welcomed by analysts but L&G’s shares fell seven per cent, in line with the insurance sector across Europe, as investors sold out of financial stocks on fears over Greece.

The strong cash generation raised L&G’s net cash by 15 per cent year-on-year to £631m, putting it on track to beat its full-year target.

“We are significantly ahead of our plans and expect comfortably to beat the £700m net cash target for 2011 set in March this year,” L&G said.

Sales of L&G’s savings products such as annuities fell one per cent to £1.3bn compared to 2010, but the result was better than the two per cent drop analysts expected.

Performance was helped by a deal to manage £1.1bn of assets from the closed Turner & Newall pension scheme and provide bulk annuities to its 30,000 members last month. But annuity sales remain generally weak as retirees put off buying them while both interest rates and stock market performance are low.

Chief executive Tim Breedon was upbeat, saying he was “confident we can continue to grow from a position of strength”.