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Legal & General Group PLC on Tuesday lifted its interim payout as it reported growth in profit and capital generation during what was a ‘good start’ to 2022.
L&G shares were 0.3% lower at 270.90 pence each in London on Tuesday morning.
The FTSE 100-listed life insurance and financial services company said its first half went to plan, despite posting a fall in assets under management, which were hit by volatile markets. It hailed growth in net flows, however.
L&G's pretax profit in the half-year that ended June 30 advanced 2.8% to £1.44 billion from the £1.40 billion it achieved 12 months earlier. Operating profit improved 7.5% to £1.16 billion from £1.08 billion, led by strong performances from its Retirement Institutional and Retail businesses.
Gross written premiums were 55% higher year-on-year at £6.61 billion from £4.26 billion.
‘All four of our divisions are well positioned to execute on compelling structural market opportunities to deliver further profitable growth over the medium and long-term, notwithstanding market volatility,’ L&G explained.
Its divisions include bulk annuity provider Legal & General Retirement Institutional, alternative asset investment platform Legal & General Capital, as well as asset manager Legal & General Investment Management. It also has a retail arm, offering savings, protection and mortgage services.
L&G upped its interim dividend by 5.0% to 5.44 pence from 5.18p.
L&G's Solvency II coverage ratio improved to 212% from 182% a year earlier and 187% at the end of 2021. The improved ratio was put down to its ‘net surplus generation’ as well as the impact of higher interest rates.
Chief Executive Nigel Wilson said L&G has made a ‘good’ start to 2022.
L&G reported total income of negative £69.19 billion, swinging from positive £14.90 billion a year earlier. The figure was hit by what is classed as external income from the Legal & General Investment Management arm. LGIM's external income includes fees from fund management, as well as investment returns on unit linked funds.
Legal & General Retirement - the firm's largest unit - saw operating profit increase 6.7% to £560 million.
At Legal & General Capital, operating profit rose 5.2% year-on-year to £263 million. LGIM's operating profit edged 2.0% lower to £200 million. At the retail unit, profit rose 14% on-year to £332 million.
L&G's assets under management fell. AUM came in at £1.290 trillion at June 30, down 9.3% from £1.422 trillion at the end of December. L&G reported a £195.3 billion hit from market movements.
AUM was down 2.8% year-on-year from £1.327 trillion.
External net flows were higher than a year earlier, however, more than doubling to £65.6 billion from £27.4 billion. Average assets under management during the half were 6.2% higher year-on-year at £1.361 trillion.
L&G achieved 22% growth in cash generation to £1.0 billion and a 14% rise in capital generation to £900 million during the half.
It backed medium-term guidance of generation cumulative cash and capital generation between £8.0 billion and £9.0 billion for the period between 2020 and 2024.
L&G said it eyeing paying dividends of between £5.6 billion and £5.9 billion for the five-year period. So far, it has declared £2.5 billion worth of dividends during the 2020 to 2024 period.
L&G added: ‘We are pleased with the further progress we have made in H1 2022 and are confident in our ability to deliver further profitable growth going forwards.
‘We will continue to maintain a defensive and diversified asset portfolio and a long-term investment horizon, supporting all our stakeholders by delivering Inclusive Capitalism through investments - both for our own portfolio and for clients - in areas such as infrastructure, clean energy and affordable housing, and by providing products to support individuals' financial resilience.’
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