Firms feel impact of pension reforms
L&G latest insurer to take annuities hit
Despite the slump, half-year pre-tax profit came in 6% higher at £672m and operating profit rose 18% to £750m on the back of a strong performance in the bulk annuity market.
Life insurers have looked to the bulk annuity market for new business as individual annuity sales have slumped following the reform of pensions which give retirees more freedom over what to do with their pension pots. Standard Life shares were punished yesterday as it reported a 66% decline in annuities sales.
Bulk annuity business involves insurers taking on the risk of all or part of company defined benefit, or final salary pension schemes.
L&G declared an interim dividend of 3.45p a share, up 19% from a year earlier.
Chief executive Nigel Wilson (pictured) said: “Legal & General continues to deliver strong organic growth in the UK and the US from both our developing and established, market leading businesses. In addition we are disposing of, or closing non-core businesses and reducing costs in real and nominal terms.
“The actions that we are taking allow us to focus on our chosen markets, enable us to continue to deliver low prices and better value for our increasing customer base and deliver attractive returns for our shareholders.”
The company said it was on track to deliver £80m in savings in 2015 and remains confident in delivering the operational cash guidance given at the time of the 2014 full-year results.”