Legal & General Sees Growth by Smaller Acquisitions, CEO Says

Legal & General Group Plc (LGEN), the fourth-biggest British insurer, will consider making smaller acquisitions to expand its investment management and savings business.

“The balance sheet is incredibly strong, there’s lots of assets for sale,” Chief Executive Officer Nigel Wilson said on a call with reporters. “We’ll still retain our financial and strategic discipline and do lots of build-buy analysis, but there will be lots of opportunities to accelerate our growth through bolt-on acquisitions.”

Legal & General is the best performer in the nine-member FTSE ASX Life Insurance Index (FALIFE) this year, rising 28 percent after avoiding investments in European sovereign debt and profiting from an increase in sales of U.K. fee-based savings products. The company has earmarked Legal & General Investment Management for growth because of its U.S. presence and technical expertise in matching assets and liabilities for pension funds.

“We’d like to make LGIM a bigger part of what we do, and that may involve adding to its portfolio” through purchases, Wilson said. The firm may also add to its non-life insurance unit and its digital savings technology, he said.

Legal & General spent about 250 million pounds ($390 million) to 300 million pounds on acquiring Suffolk Life, which specializes in self-invested personal pensions, and Nationwide Unit Trust Managers during the tenure of previous CEO Tim Breedon. Wilson, 55, took over from Breedon in June.

‘Huge’ Cash

The insurer, which is the biggest investor in the U.K. stock market with 381 billion pounds of assets, would also like to allocate more cash in Britain should the government provide a more certain fiscal and regulatory environment, Wilson said.

“L&G as a group would be willing to invest much more in the U.K. if there was greater certainty and economic confidence in the performance of the U.K.,” he said. “Corporates in particular have a huge amount of cash to invest, and we’d really like to see more encouragement.”

Legal & General’s first-half profit rose 5 percent on sales of income protection and annuity products, the company reported today. Operating profit climbed to 518 million pounds in the six months to June 30, beating the 500 million-pound median prediction of seven analysts surveyed by Bloomberg.

The firm increased its first-half dividend 18 percent to 1.96 pence a share. That beat the analysts’ median estimate of 1.88 pence. Net income rose 14 percent to 406 million pounds in the period.

Since 2007, the company has tripled the cash it generates by cutting costs, reducing commissions paid to sales advisers and withdrawing money-losing products.

The stock dropped 2.2 percent to 128.6 pence at 9:23 a.m. in London trading, valuing the firm at about 7.6 billion pounds. It closed at a four-month high yesterday.

To contact the reporter on this story: Kevin Crowley in London at kcrowley1@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net;