Legal & General profit up 18%

British insurer Legal & General posted a forecast-beating 18% rise in first-half operating profit yesterday, helped by strong performance in the bulk annuity corporate pensions market, sending its shares up over 3%.

Life insurers have looked to the bulk annuity market for new business as personal annuity sales dwindle following British reforms to tax rules for pension savers which give retirees more freedom over what to do with their pension pots.

Bulk annuity business involves insurers taking on the risk of all or part of company defined-benefit, or final-salary, pension schemes.

“We see strong demand for pension de-risking and longevity insurance across the world,” said Nigel Wilson, chief executive at Legal & General.

He said that the insurer’s pipeline for bulk deals was strong and it hoped to expand that business into the US and Europe.

The company has also branched out from individual annuities, which fell 53% in the first half, into the lifetime mortgage business, in which house owners release money from their properties to fund their retirement.

The firm said in a trading statement that it has doubled its target for lifetime mortgages and expected to write around £200m (€284.8m) in new business this year and “increasing amounts thereafter”.

Legal & General’s operating profit rose to £750m in the six months to the end of June from a year earlier, which the company said beat a market forecast of £692m, according to its own survey of analysts.

Meanwhile, Legal & General Investment Management’s assets under management rose 12% from a year earlier to £715bn.

The company’s share price was up 3.2% at one stage in London trading yesterday, making its shares the top performer in the FTSE 100 index.

Reuters