L&G beats forecasts, sees mixed outlook

Insurance giant Legal & General (L&G) topped market expectations with its interim figures and has rewarded shareholders with a 20% hike in the dividend.European Embedded Value (EEV) operating profit in the first half of 2010 was £589m, down from £656m the year before but ahead of most broker forecasts.Panmure Gordon had forecast a figure of £572m for L&G's EEV operating profit, which it said was towards the top of the range of market forecasts. EEV value per share rose 4% to 119p from 114p at the end of 2009.On an international financial reporting standards (IFRS) basis operating profit rose 34% to £542m from £404m the year before, while IFRS pre-tax profits climbed by £680m to £537m from last year when it made a loss of £143m in the first half.Worldwide new business on an annualised premium equivalent (APE) basis jumped 18% to £881m from £746m a year earlier. In the first half of 2010 the group increased operational cash generation by 21% to £402m from £333m in the first half of 2009. Investment in new business totalled £44m."We remain on track to generate at least £600m of net cash in 2010," the company said."At the end of June the group had £3.3bn of capital in excess of our current regulatory capital requirements," said group chief executive Tim Breedon."The outlook for our markets in the second half of 2010 and into 2011 continues to be mixed. We are optimistic about growth prospects in UK savings and annuities, though there is little evidence of recovery in the UK housing market. We continue to see opportunities to export our investment management and bancassurance franchises into international markets," Breedon added.The half year dividend has been increased from 1.11p to 1.33p.