Legal & General reports slight fall in annual profits
Legal & General reported flat annual operating profits as it set aside an extra £110m in Covid-19 insurance claims due to the emergence of new virus strains.
Operating profit fell slightly to £2.21bn from £2.28bn with three of its five divisions delivering growth. L&G’s fund management arm saw assets under management increase 6.9% to £1.3bn.
Pre-tax profit fell to £1.78bn from £2.11bn. The company has already said it would keep its dividend unchanged at 17.5 a share.
The company’s solvency ratio fell came in at 177% compared with 184% a year earlier. L&G estimated a ratio of 192% at March 5.
“The immediate outlook for the broader economy over the near term is still highly uncertain and will depend on a number of factors, including vaccine efficacy and distribution, as well as government responses to the challenges ahead,” the company said on Wednesday.
Steve Clayton, manager of the Hargreaves Lansdown Select UK Income fund, which holds L&G stock, said the company's diversity meant that "what it lost in heightened mortality claims, it recouped elsewhere leading to a robust overall performance"
"Crucially, capital levels have risen strongly since year end and now sit at 192%, giving the group plenty of opportunity to deploy these funds in search of accelerating growth."
"Unlike many financial services companies, L&G kept paying dividends to shareholders through thick and thin, despite coming under fire for doing so – these results vindicate the group’s stance. With a yield on the stock of over 6%, L&G unsurprisingly forms a key part of many income investors’ portfolios.”