Shares in the UK’s largest life insurer Legal & General (LGEN) edged higher by 0.4% to 283p after the firm reported what it described as a ‘robust performance’ for 2020 with underlying operating profits marginally ahead of consensus and a dividend which matched the previous year.
SMALL BEAT
For the year to December, operating profits were £2.42 billion, slightly below 2019’s level of £2.48 billion due to a £110 million provision for its protection and house-building businesses but ahead of market estimates.
Chief executive Neil Wilson called the results ‘resilient’, saying L&G’s ‘products, services and strategic growth drivers are more relevant than ever’.
Shore Capital analyst Alan Devlin highlighted the strong performance of the core annuity business, which grew earnings 10% - well ahead of consensus estimates - to £1.56 billion or two thirds of total operating earnings.
DIVIDEND MAINTAINED
The firm’s balance sheet remained healthy despite the pandemic with a Solvency II coverage ratio of 177% at the year-end, rising to 192% as of the start of March according to management.
Surplus cash above its Solvency II coverage ratio was £1.5 billion, allowing the company to pay an unchanged total dividend of 17.57p per share, in line with forecasts, giving the shares an attractive 6.2% yield.
