Legal & General’s share price falls after group boosts dividend on the back of double-digit profit growth
Legal & General's share price fell this morning, despite boosting its dividend by 19 per cent and committing to "progressive" increases in future on the back of double-digit profit gains.
The figures
Operating profit was up 14 per cent to £1.46bn, while profit after tax rose 10 per cent to £1.09bn. Adjusted earnings per share rose 11 per cent to 18.58p, and the full year dividend is being upped 19 pe cent to 13.4p.
L&G has also revealed its Solvency II surplus has risen to £5.5bn, a coverage ratio of 169 per cent. Its economic ratio stands at £7.6bn, a coverage ratio of 230 per cent.
Net cash was up 14 per cent to £1.26bn.
At LGIM, assets under management (AUM) rose eight per cent to £746.1bn, thanks to net inflows of £37.7bn, while LGR grew new business £2.9bn.
Investors were unsure, however: L&G's share price fell 3.3 per cent on the open.
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Why it's interesting
L&G is working on five long-term growth strategies: ageing population, globalisation of asset markets, creating real assets (ie investing in housing and infrastructure), welfare reform and digital.
These appear to be paying off for the firm – and its shareholders.
"We believe that by aligning our strategy to growth drivers together with our diversified revenue streams, creates resilience," L&G said this morning.
But there was a note of caution in its update.
"No model however can be completely immune from slowing global growth and continuing market uncertainty," the firm said.
What L&G said
Group chief executive Nigel Wilson said the figures were "excellent".
"We had already moved to a capital-lite model for UK pension risk transfer business in anticipation of the new Solvency II regime and we will use our Solvency II surplus capital of £5.5bn to continue to deliver on our strategy," he added.
"We have a robust business model which has proved to be adept and resilient in dealing with fiscal and regulatory changes in our sector. We are planning for more global economic and market volatility and are well positioned for continued pressure on pricing and changes in product mix in our industry.
"Our strategy is aligned to growth for our markets, meeting our customers' needs and delivering socially useful products. We remain confident in the outlook for our business."
In short
A bullish outlook and a strong set of figures from L&G