Legal & General profits down on longer-life charge
Tuesday, 18 Mar 2008 08:35
Legal & General profits down for the year
Full-year profits are down 26 per cent to £912 million at Legal & General (L&G) as the insurer was forced to reassess its longevity assumptions.
On a European embedded value basis, the company paid out £269 million to make up for longer life expectancies in the UK.
As people live longer, companies who pay out annuities are increasing the risk of making a loss on its products. Rival Standard Life recently reinsured most of its portfolio to reduce its own risk.
L&G said its businesses performed well, given a slowing housing market and volatile financial conditions.
However, L&G added savings market conditions in 2008 are likely to be more testing than in 2007.
L&G said: "We expect 2008 will be a challenging year for the economy and for the industry. Legal & General has shown in the past it can build profitable market share in tougher trading conditions."
On a statutory basis, operating profit more than halved to £658 million, while the contribution from life and pensions dropped to £359 million from £418 million a year ago.
L&G recommended a full-year dividend of 5.97p, up 7.6 percent on a year earlier.