L&G profits surge 44% after equity release & annuity yields


Profits in Legal & General’s retirement business grew 44 per cent in the first half of the year, driven by equity release sales and annuity book deals.

Half-year results, published today, show pre-tax profit rose from £292m in the first six months of 2015, to £469m this year.

Lifetime mortgage advances rose from £37m to £231m.

Bulk and individual annuity sales were down, however the firm acquired a £2.9bn back book of Aegon annuities. From October 2016 L&G will provide annuities to Aegon customers.

Legal and General Investment Management’s retail business saw external net inflows more than double to £700m in the first half compared to £300m in H1 2015.

LGIM noted it was second in terms of market share for net retail sales in Q2 2016, with AUM over the entire first half increasing to £21.4bn compared to £18.9bn in H1 2015.

Overall, group operating profits rose 4 per cent, from £750m to £777m.

Despite significant uncertainty in the property sector in the period following Brexit, LGIM saw £100m external net inflows to its real assets business. It was one of the few major funds in the sector that did not suspend trading due to redemptions.

LGIM’s total AUM increased 18 per cent to £841.5bn from £714.6bn a year ago, which the report attributes to a “significant appreciation in asset values towards the end of June”. The average monthly closing AUM for the six months was £784.1bn, compared to £715.bbn for the same period last year.

However, operating profit fell by 3 per cent to £171m, compared to £176m for H1 2015.

The results also reveal the closure of the flagship Kingswood office has resulted in a £45m hit to pre-tax profits.

Overall, group operating profits rose 4 per cent, from £750m to £777m.

Group chief executive Nigel Wilson says: “There are many different views of the outlook for economic growth, the state of financial markets and political uncertainty. We reflect this in our approach to risk management.

“While we cannot be immune to this uncertainty, we remain confident that we will continue to deliver attractive returns for shareholders, great value to customers and better outcomes for society. Our five long-term growth drivers, ageing populations, globalisation of asset markets, creating real assets, welfare reform and digital remain unaffected and will continue to provide many growth opportunities.”