Legal & General reports 'strong start' to year

As investors and analysts gathered in London for Legal & General’s capital markets event on Tuesday morning, the company also updated the market on its year-to-date, saying it had a “strong start” having completed more than £1bn of bulk annuity sales.

The FTSE 100 firm said the market pipeline for UK bulk deals remained “strong” at over £12bn.

LGR's retail customer division achieved more than £300m of sales in individual annuities, up 120% on last year and over £360m of lifetime mortgages, up 90% on last year.

LGIM now had assets under management of over £950bn having experienced £16.8bn net inflows.

The company said Legal & General Capital had completed, or exchanged contracts for, disposals which would generate proceeds of around £150m, remaining on track to meet its full year disposal target of £250m.

Meanwhile LGC had invested or committed £138m in infrastructure investments including build-to-rent housing and urban regeneration projects.

Legal & General Insurance's (LGI) UK Retail Protection premiums were up 5%, the board said, and LGI US had paid a dividend of $100m, up 10% on last year.

As at 15 May 2017, L&G had an estimated Solvency II surplus of £7.0bn with a 188% coverage ratio, on a shareholder basis.

The board said the payment of the 2016 final dividend would reduce the coverage ratio by 7.7%, as stated in its press release on 19 May.

Its S&P credit rating was AA-, with S&P's assessment of L&G's 'management and governance' upgraded to strong in 2016, while Moody's rating is Aa3.

“Managing credit risk is at the core of the skillsets of the Legal & General Group,” said group CFO Jeff Davies.

“We have managed a high performing global portfolio of c.£50bn with just £26m of defaults between 2007 and 2016.”

Davies said Tuesday's presentation would show the portfolio was “robust” in a 2001/2002 adverse default and downgrade scenario, which was more extreme than the credit crisis experience in 2008.

“Our risk management approach and strong default reserves give us a confidence which is borne out by the scenario testing we are presenting today.”