Group operating profit falls but still beats expectations
Legal & General (L&G) Group has announced a “resilient financial performance” in the first half of the year, with operating profit and after-tax profit hitting £941 million and £316 million respectively.
While the group’s operating profit fell by 2% annually, it did beat consensus analyst expectations of £834 million.
“We remain on track to achieve our five-year ambitions and deliver attractive returns for our shareholders,” Nigel Wilson (pictured), group chief executive at Legal & General, commented on the first half financial results.
“We delivered £0.95 billion of both IFRS operating profit and capital generation, together with a solvency II ratio of 230% and a surplus of £9.2 billion. The dividend is up by 5%.”
Wilson added that L&G Retirement Institutional and L&G Capital performed strongly, posting operating profit growths of 19% and 13% to £471 million and £296 million respectively.
He said L&G Investment Management results stabilised with operating profit reaching £142 million, and L&G Retail’s performance – while impacted by competition in some areas – was bolstered by growing annuity sales and progress in US protection, with operating profit hitting £230 million.
“We wrote £4.9 billion of UK PRT (pension risk transfer), deploying just £106 million of capital, underlining the benefits of our synergistic business model,” shared the outgoing CEO, who will be retiring at the end of the year.
Meanwhile, Matt Britzman, equity analyst at Hargreaves Lansdown, said the reaction to Legal & General’s half-year results was “a little harsh” – a reflection of broader market uncertainty rather than anything relating to the results.
“Higher interest rates have been causing some trouble for assets under management from the investment management division, though things are starting to stabilise,” Britzman pointed out. “But at the same time, higher rates are benefiting the larger pension businesses.
“Nonetheless, operating profit beat expectations, guidance remains, and solvency looks strong – all in, this read like a decent half.”
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