Life insurer and wealth manager Legal & General’s (LGEN) 10% rise in adjusted operating profit to £822 million has been eclipsed by concerns over declines in its investment and general business divisions.

Shares fell 4.7% to 207.7p after the market examined the details behind the headline figures in the half year results to 30 June.

The problem is that external asset under management net flows in its investment management arm (LGIM) declined by 30.4% to £9.6 billion in 12 months.

A 4.8% decline in general insurance premiums to £156 billion during the period also spooked the market.

Web - Legal & General - 9 August 2016

The headline figures, which included generating 16% more cash at £727 million, were driven by the retirement business. Operating profits here increased 44% year-on-year to £406 billion.

This is the result of Legal & General selling more annuities. Demand of the product has been hit by the government giving people more choice in how to fund their retirement.

Legal & General saw annuity sales increase by 186% to £3.7 billion, while lifetime mortgages, where a loan secured against a home is not repaid until a customer dies or moves into a care home, improved by 524% to £231 billion.

The spike in annuity sales is the result of the group targeting workplace pensions, a key battle ground for life companies after the industry wide drop off in individual sales.

Issue Date: 09 Aug 2016