Legal & General have beaten market expectations today posting profits of £941 million for the first six months of the year despite new accounting rules putting a dent in the insurance giant’s accounts.
In its half year results, L&G said it had delivered operating profits ahead of the £834 million analysts had been expecting but down from £958 million in the same period last year.
Sir Nigel Wilson, Group Chief Executive:
“We remain on track to achieve our five-year ambitions and deliver attractive returns for our shareholders. In H1, we delivered £0.95bn of both IFRS operating profit and capital generation, together with a Solvency II ratio of 230% and a surplus of £9.2bn.
“The dividend is up by 5%. LGRI and LGC performed strongly, LGIM results stabilised, and Retail’s performance – while impacted by competition in some areas – was bolstered by growing annuity sales and progress in US protection.
“We wrote £4.9bn of UK PRT, deploying just £106m of capital, underlining the benefits of our synergistic business model. I’d like to thank my colleagues for their contribution and ongoing commitment to inclusive capitalism, serving our shareholders, customers and wider society.”
The numbers reveal the scale of the hit from new accounting IFRS rules introduced from January this year, which are expected to hamper reported profits across the industry.
In June 1836, six lawyers founded Legal & General. Today they help over 10 million people with savings, retirement and life insurance.
Legal & General Group plc, commonly known as Legal & General, is a British multinational financial services and asset management company headquartered in London, England. Its products and services include investment management, lifetime mortgages (a form of equity release), pensions, annuities, and life assurance.
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H1 2023 Results: £0.95bn of operating profit and capital generation, stock of deferred profits up to £13.8bn, DPS up 5% to 5.71p and SII ratio of 230%.
Resilient financial performance
- Operating profit of £941m (H1 2022: £958m)
- Solvency II coverage ratio of 230%, with surplus of £9.2bn (H1 2022: 212%)
- Solvency II operational surplus generation of £947m (H1 2022: £946m)
- Profit after tax of £316m (H1 2022: £575m)
- Interim dividend of 5.71p, up 5% (H1 2022: 5.44p)
£947m capital generation with significant dividend headroom
- On track to achieve five-year (2020-2024) ambitions. To date:
- Capital generation of £5.9bn (£8.0-9.0bn by 2024)
- Dividends of £3.6bn (£5.6-5.9bn by 2024)
- Net surplus generation over dividends of £0.6bn
- The Board’s intention is to continue to grow the dividend at 5% per annum to FY24
Stock of deferred profits up to £13.8bn as new business outpaces backbook release
- New business deferred profits of £0.6bn
- LGRI premiums of £5.0bn (H1 2022: £4.4bn) generating deferred profit of £0.4bn
- In H2, LGRI has already written a further £1.8bn UK and $1.0bn US PRT
