LONDON (Alliance News) - Legal & General Group PLC Wednesday reported an 8% increase in annual pretax profit, bolstered by double-digit operating profit growth in its retirement, capital and investment management divisions.
The life insurance and investments group said it made a GBP1.24 billion pretax profit in 2014, up 8.8% from GBP1.14 billion in 2013. According to consensus estimates published by the company, analysts had been forecasting a pretax profit of GBP1.29 billion.
Revenue increased to GBP51.52 billion from GBP39.26 billion, bolstered by the group's investment return, higher net premiums earned, and a slight increase in fees from fund management and investment management. Expenses were up to GBP50.10 billion from GBP37.94 billion, largely due to higher net claims and change in insurance liabilities.
Legal & General also set out plans to manage and cut costs in 2015, with the aim of reducing management expenses and operating costs by about GBP80 million, with an eye on driving "greater efficiencies" through its businesses, as well as "responding to the reduced contribution from our mature savings products". Restructuring costs of about GBP40 million will be taken in 2015 to achieve the cost savings, the company said.
The group's retirement division was a driver behind its performance at the divisional level, reporting a 38% jump in operating profit to GBP428 million, while Legal & General Capital, which manages the group's principal investments, reported a 13% increase in operating profit to GBP203 million.
Legal & General Investment Management, the group's institutional asset manager, reported an 11% increase in operating profit to GBP336 million, while its protection and savings business, the assurance society, reported that operating profit increased by 4% to GBP460 million.
However, the American life insurance division's operating profit fell to GBP56 million from GBP92 million.
"Our market leading growth businesses coupled with continuous cost reductions have given us scale and efficiency in our chosen markets. The five global macro trends driving our strategy - ageing populations, globalisation of asset markets, welfare reform, digital connectivity and bank retrenchment - create long term growth opportunities, which we position our businesses to capture," Nigel Wilson, chief executive, said in a statement.
Legal & General increased its dividend for the year to 11.25 pence per share from 9.30p in the prior year, slightly ahead of the 11.23p forecast by analysts.
The group said its dividend for the year reflects a net cash cover of 1.65 times. It said it expects to reduce its net cash coverage of dividend towards 1.5 times in 2015 but will provide further guidance when it has a clearer picture of a package of new insurance rules, known as Solvency II, which aim to harmonise regulations across the European Union.
Net cash generation increased to GBP1.10 billion from GBP1.00 billion.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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