Despite recording a £64 million fall in profits, Legal & General announced 25 per cent higher interim dividends today.
In the six months to 30 June, the pre-tax profit for Legal & General was recorded at £473 million, a fall of 12 per cent from the £537 million recorded over the same period, last year. However, L&G will still pay 25 per cent higher interim dividend, the company announced.
A slowdown in new annuities business, coupled with increased claims in group protection and non-recurrence of positive inflation modeling effect witnessed last year were attributed to the fall in operating profits, recorded at £236 million for the six months to June 30.
However, the company’s operating cash flow (CFO) went up £498 million in the last six months, compared to £417 million in H1, 2010. Net cash flow for the period was also higher at £427 million, from £373 million in H1, 2010.
Global sales were up by a marginal 4 per cent and were recorded at £920 million for the period, from £881 million in 2010. Time Breedon, group chief executive at L&G was upbeat despite the fall in profits.
“We remain confident in our business model and strategy. Our leading market positions in UK savings, annuities, protection and asset management are delivering healthy returns for shareholders,” said Mr. Breedon.
“Sales volumes continue to grow, and we are developing attractive new businesses both in the UK and internationally,” he added.
Mr. Breedon underlined the importance of a strong balance sheet citing market volatility, economic uncertainty and impending regulatory changes in the life insurance business.
“In these conditions it is prudent to maintain a strong balance sheet. Our Insurance Groups Directive surplus of £4bn provides sufficient capital to exploit opportunities as they emerge, to continue to grow the business and to provide protection from economic and regulatory risks,” he said.