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A buoyant annuities market helped Legal & General beat analyst expectations in interim outcomes and boosted smaller rival Just Group, which stated it was “highly confident of comfortably exceeding” its full-year revenue steering.
L&G, the FTSE 100 insurance coverage and asset administration group, posted first-half working revenue of £941mn, down 2 per cent 12 months on 12 months however beating consensus analyst expectations of £834mn.
Presenting his closing set of outcomes after greater than a decade on the helm, which included higher than anticipated solvency, Sir Nigel Wilson stated L&G was on monitor to satisfy its five-year targets and had been “bolstered” by rising annuity gross sales.
In the interval, the group did £4.9bn of UK corporate pension deals through which corporations pay a bulk premium to dump their pension liabilities. In the second half, L&G has thus far written £1.8bn and has agreed an identical quantity of deals within the US because the finish of June.
Analysts stated the corporate had put up much less capital towards these deals than anticipated. “We have scope to write up to £11bn of UK [bulk annuity] volumes and for the UK annuity portfolio to be self-sustaining again in 2023, as it has been for the last three years,” L&G stated.
Rising rates of interest have lifted the funding ranges of pension funds throughout the nation and put many extra ready the place they’ll do a take care of an insurer. The surge in market exercise has raised questions concerning the insurance coverage sector’s capability to swallow all these schemes, and the regulator has referred to as for insurers to train moderation in how a lot new enterprise they tackle.
However, rising rates of interest additionally sapped L&G’s fund administration arm, pulling the worth of its property below administration down from £1.29tn in June 2022 to £1.16tn.
And the insurer fared much less effectively in its UK safety enterprise, with new enterprise annual premiums falling from £85mn to £76mn in what it described as an “increasingly competitive market”. But its retail enterprise was additionally “bolstered” by rising particular person annuity gross sales.
Rival Just Group, the FTSE 250 life insurer, stated in its interim outcomes it was “highly confident of comfortably exceeding” its full-year working revenue goal attributable to a buoyant marketplace for particular person and bulk annuity gross sales, each boosted by increased rates of interest.
Just Group’s shares had been modestly increased in early buying and selling, whereas L&G’s had been down by simply over 3 per cent, amid a broader decline in UK blue-chip shares.