ii view: Legal & General firing on all cylinders

by Keith Bowman from interactive investor |

Assets under management rise at Legal & General buoyed by international growth. 

Half-year results

  • Asset under management up 15% to £1,135 billion
  • Operating profit up 11% to £1 billion
  • Dividend payment up 7.2% to 4.93p per share

Chief executive Nigel Wilson said:

“Legal & General's five businesses collectively delivered another strong set of results. We have a depth of management, track record and opportunities that mean all five of our businesses should contribute to future growth. Our balance sheet remains strong. We have a globally diversified asset portfolio with minimal exposure to UK sub-investment grade credit. We are well-prepared for the full range of foreseeable Brexit outcomes.”

ii round-up:

Founded by six London lawyers in the 1830s, today Legal & General Group (LSE:LGEN) has a stock market value in excess of £14 billion. 

The company operates across the three areas of investing and annuities, investment management and insurance. 

For a round-up of these half-year results, please click here.

ii view:

An ageing population and moves by government to place a greater emphasis on individuals to save for their own retirements provide for a favourable backdrop. Ultra-low interest rates have also seen savers seeking returns from cash alternatives such as equity related products.

A strategy to be a leader in the pension asset management and insurance markets is being pursued hard. Given intense competition in the asset management arena, L&G has for some time been embracing low-cost products. Net fund inflows have been enjoyed, with expansion overseas firmly contributing.  

For investors, a prospective dividend yield of around 7%, not guaranteed, offers clear appeal, as does a record of 9 years of consecutive dividend increases. Brexit and broader concerns for asset market levels add some caution. 

Positives: 

  • Diversity of both product and geographical location
  • International assets under management rose by 50% to £343 billion
  • Its direct Investments rose 36% to £22.2 billion

Negatives:

  • General insurance operating profit fell 13% to £134 million
  • The cost/income ratio ticked slightly higher
  • Vanguard recently further escalated a price war

The average rating of stock market analysts:

Strong hold

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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