L&G Operating Profit Rises 7 Percent on Boost From Pension Unit

  • Retirement unit operating profit rose 27 percent last year
  • Investment management unit oversees $1.09 trillion of assets

Legal & General Group Plc , the U.K.’s largest manager of pension assets, posted a 7 percent increase in full-year operating profit after earnings jumped at its retirement division.

Operating profit advanced to 1.56 billion pounds ($1.9 billion) from 1.46 billion pounds a year earlier, according to a statement Wednesday. That compares with the average 1.62 billion-pound estimate of 21 analysts surveyed by L&G. Operating profit at the retirement division rose 27 percent, while earnings at the investment management unit increased 3 percent.

L&G is one of Europe’s biggest asset managers, overseeing 894 billion pounds. The London-based insurer, led by Chief Executive Officer Nigel Wilson, is focusing on retirement products designed to mitigate pension risk.

Inflows at its investment unit, which manages defined benefit pension fund assets, declined to 29.2 billion pounds last year from 37.7 billion pounds in 2015. Higher management fees were “partially offset by planned investment to grow the business and ongoing industry fee pressure,” L&G said.

The company’s Solvency II ratio, a measure of an insurer’s ability to absorb losses under industry regulation introduced in 2016 in the European Union, fell to 171 percent from 176 percent a year earlier. A ratio of 100 means a firm has sufficient capital to withstand the kind of shock that happens once in 200 years.

The shares, little changed at 8:37 a.m. in London, have gained 2.1 percent this year. That compares with a 1 percent increase in the Bloomberg Europe 500 Insurance Index.

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