Legal & General Beat Profit Forecast

TEP – 31 March 2010

Legal & General had announced a dramatic turnaround in dividend prospects, lifting its final payout by 33 per cent and signalling further increases to come.

In a confident full year results statement, it posted a better than expected 87 per cent surge in operating profits to £1.1 billion and forecast a rebound in the depressed UK savings and pensions industry this year.

L&G, Britain's sixth-biggest insurer by market value, has been attempting to boost earnings by trimming costs and moving away from products which require a big capital outlay or the payment of commissions to middlemen.

Although sales fell 7 per cent in 2009, L&G more than doubled net cash generation to £699 million, smashing its target for the year by more than £250 million.

It also reported success in cost reduction, reducing annual expenses by £69 million, against a target of £50 million.

Tim Breedon, the chief executive of L&G had said that the results demonstrate the significant progress to continue to make in transforming the group into a lower cost, capital-efficient, cash generative business.

He expected the economic recovery in the UK to be slow with the housing market subdued, but L&G's business would nevertheless rebound.