Legal & General is reporting that it has seen a ‘good start’ to this year, with operating performance in line with its expectations.
In a statement, the firm said it expected to deliver double-digit growth in cash and capital generation in the first six months.
The firm said its institutional retirement segment of its business has transacted £4.5bn of global pensions risk transfer in the first half of the year, nearly 50% higher than at the same point in 2021. This, said the firm, comprises £3.8bn of UK PRT (£3.0bn at H1 2021) and £0.7bn of International PRT (£0.1bn at H1 2021).
On its retail side, it said that its protection gross written premiums (GWP) were higher year on year, while individual annuity sales and mortgage advances were lower. Retail protection new business was down to £85m from £105m at H1 2021. Group protection business rose over the same period from £55m to £63m. US protection business rose from £43m to £48m. Meanwhile, individual annuity sales dropped from £483m to £453m.
Sir Nigel Wilson, chief executive of Legal & General, said: “Our year-to-date operating performance is in line with expectations, with cash and capital generation running slightly ahead of our five-year ambition and ROE at c20%. This reflects the strong execution of our stated strategy – which is closely aligned to long-term structural growth drivers such as ageing demographics, investing in the real economy, and addressing climate change – both in the UK and, more recently, in the US.”
He added: “The Group’s overall exposure to inflation is minimal and our balance sheet is strong: the recent increase in solvency provides further security and optionality. We remain confident in Legal & General’s ability to grow profits sustainably and at attractive returns over the long-term.”
The group estimated its Solvency coverage ratio as at 30 June 2022 is c215%, up at least 25 percentage points from FY 2021 (187%), principally reflecting the contribution from higher interest rates and strong ongoing operational surplus generation, and after paying the 2021 final dividend. Group cash-flows remain strong and return on equity is consistent with our c20% historic performance.
It said that as indicated at FY 2021, it expected to achieve £1.8bn of capital generation in 2022. Ratings from Fitch (AA-), Moody’s (Aa3) and S&P (AA-) remain unchanged.