Legal & General’s Cash Rises on Annuities, Income Protection
Legal & General Group Plc (LGEN), the U.K.’s fourth-biggest insurer by market value, said cash generation rose 2.5 percent on sales of annuities and income-protection products.
Legal & General produced 616 million pounds ($994 million) of cash, defined as profit before dividends and reinvestment, in the nine months to Sept. 30, compared with 601 million pounds a year earlier, the London-based company said today in a statement. That beat the 608 million-pound average estimate of 15 analysts surveyed by the company.
Legal & General has climbed 30 percent this year as the prospect of a break-up of the euro receded and the firm increased its first-half dividend by 18 percent. The insurer has tripled cash generation since 2007 by cutting costs, reducing commissions paid to sales advisers and withdrawing money-losing products.
“This is a good set of numbers, with cash in line and a beat on sales,” Edward Houghton, a London-based analyst at Sanford C. Bernstein with a buy rating on the stock, wrote in a note to clients today.
Sales rose six percent to 1.4 billion pounds in the nine months to Sept. 30, boosted by a 28 percent increase in the third quarter alone, the insurer said. Revenue from annuities and income protection products rose 69 percent in the three- month period to 132 million pounds, it said.
So-called income protection products, which cover death and illness, experienced high demand “as retail and corporate customers seek to reduce exposure to financial risk,” the company said.
“Global economies are undergoing profound structural changes,” Chief Executive Officer Nigel Wilson said in the statement. “We have the solutions to meet gaps emerging from public and private deleveraging.”
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