Insurer L&G posts 43% increase in FY profits

Insurer L&G posts 43% increase in FY profits

	Published : Fri, 17 Mar 2006 20:05 By : Paula Demarzio Print this Story

ONDON: British insurer Legal and General Group Plc. turned in better than expected profits for full year 2005 as it secured record new businesses and improved some margins.

The insurer, third largest in the country, posted 43 per cent increase in operating profits at 1.092 billion pounds against 2004's 745 million pounds under the European embedded value accounting norms, exceeding analyst forecasts of 934 million pounds.

It said the improvement is a reflection of its strong sales of high margin products in Britain and it expected further growth in future.

Chief executive Tim Breedon said 2005 marked a record year for the company for new business, profits and market share -- the latter rising to more than 10 percent.

Some analysts said the insurer could restructure its balance sheet to make it more efficient, like returning more cash to shareholders. Breedon, who took over as CEO recently, said he is reviewing all aspects of the business, including the balance sheet.

There are analysts who believe L&G is a takeover target for buyers abroad wanting to consolidate their businesses. Even Breedon admitted there are speculations.

The company said its U.K. life and pensions profit rose a massive 69 per cent to 801 million pounds, while its margin on new business remained unchanged at 4.6 per cent. Profit from its investment management business grew 26 per cent to 136 million.

However, operating profit from international life and pensions business was down 12 per cent to 100 million pounds, as U.S. remained weak though Europe showed improvement.

Breedon would not rule out expansion abroad, but it does not constitute the company's core strategy.

L&G has recommended a final dividend of 3.63 pence, up 5.2 per cent on the year. L&G shares closed at 134 pence, valuing the company around 8.7 billion pounds.