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L&G blames loss on increased default reserves

Legal & General last week revealed an operating loss of £189m in 2008, compared with a profit of £658m in 2007.

The group’s net loss from ordinary activities was £1.13bn in 2008, compared with a profit of £718m in 2007.

L&G says the loss reflects increased credit default reserves.

Tim Breedon, group chief executive, says: “We took action in 2008 to improve our cash flow and streng-then our capital base by substantially increasing our credit default reser-ves, reducing our equity exposure and managing our cost base.

“Balance sheet strength remains our priority in 2009 and this will be underpinned by further improvement in the cash profile of our businesses and management of costs.”

He adds: “We will be selective about sales growth and are reducing new business capital strain through product design and pricing.”

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