L&G sales up but capital fears persist
INSURER Legal & General (L&G) reported above-consensus first-quarter sales of £382m yesterday and said the worst of the crisis appears to be over, but fears over the firm’s capitalisation levels continued to dominate.
L&G revealed a 3 per cent global sales rise, from £372m a year ago, which was massively bigger than analyst expectations of around £319m.
But Charles Stanley analyst Sam Hart said the firm’s capital surplus at the end of the first quarter of 2009 was £1.6bn, significantly lower than the £2.9bn reported at the end of September last year. “We believe that until a material improvement in the group’s capital position is witnessed the stock is likely to remain in the doldrums,” he said.
L&G’s shares plummeted on the results statement, diving to 58.3p by the close of play – a 10.99 per cent fall.
Group chief executive Tim Breedon cautioned that 2009 will be a difficult year, but he said there is “greater confidence in markets that the worst of the financial crisis is behind us”.
L&G also reported a 6 per cent boost in sales of savings products at its UK business, and a 32 per cent overseas sales leap, as the plummeting value of sterling made its products more attractive outside the UK.
These sales boosts helped to offset a 10 per cent drop in new business at the firm’s UK Risk arm, where it said it is continuing to diversify its products away from mortgages as the housing market remains difficult.
Meanwhile, Lloyd’s of London insurer Amlin posted a 39.2 per cent rise in gross written premiums to £729.7m in the four months to the end of April, boosted by the strength of the dollar.
The group said the trading environment has improved, reporting the average renewal rate increase was 4 per cent. It said investment returns were positive at 0.4 per cent.