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Legal & General Targets U.S. Acquisitions as Profit Gains

An Elderly Couple
An elderly couple sit on a bench on the seafront promenade in Hastings, U.K. Legal & General Group Plc is betting that lower state retirement and welfare provisions and an aging population will continue to boost U.K. sales of pensions and income-protection policies. Photographer: Chris Ratcliffe/Bloomberg

Legal & General Group Plc said it’s targeting the U.S. for expansion after the U.K.’s biggest manager of pension assets posted higher earnings and an increased dividend.

The London-based insurer increased its full-year operating profit 7 percent to 1.16 billion pounds ($1.9 billion) in 2013 and raised its final dividend 22 percent to 9.30 pence a share, according to a statement today. Its investment unit attracted record net inflows of 15.7 billion pounds from international clients, with assets jumping 37 percent.

“We would like to be bigger in America,” Chief Executive Officer Nigel Wilson told journalists on a conference call. “We have been very measured in our expansion to date, so that’s an area of focus. They will likely be more bolt-ons. We are not trying to knock the ball out of the park.”

L&G is seeking acquisitions as it capitalizes on changes to global pension systems and aging populations. The company made its first U.S. acquisition last month, agreeing to buy Global Index Advisors, which will help boost its assets in North America to more than $50 billion.

“Pension provision is a business that we are very confident in and can continue to be successful at,” said Wilson. “All markets that we compete in are competitive. We’ve managed to get an incredible client base already in the U.S.”

The company operates a protection business in the U.S. selling insurance-based products, as well as an asset-management unit. Among other British insurers, Prudential Plc operates Jackson Life, a U.S. annuities provider, while Aviva Plc sold its North American operations last year.

L&G fell 2.1 percent to 235.5 pence at 11:20 a.m. in London.

Operating profit and operational cash generation was 1.04 billion pounds, falling short of analysts estimates provided by the company. Barclays Plc analyst Alan Devlin reduced his earnings estimates for L&G in 2014 and 2015, saying the workplace pensions business will continue to lose money in 2014.

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