Legal & General share price underperforms as group posts earnings drop

Blue-chip insurer unveils rise in operating profit

Legal & General share price underperforms as group posts earnings drop

Shares in Legal & General Group (LON:LGEN) have fallen into the red in London in today’s session, as the blue-chip insurer posted a drop in half-year earnings. The company, however, unveiled a rise in operating profit and hiked its payout to shareholders.

As of 13:04 BST, Legal & General’s share price had given up 1.10 percent to 261.60p, underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.66 percent lower at 7,725.44 points. The group’s shares have lost nearly four percent to their value over the past year, as compared with a near three-percent gain in the Footsie.

L&G posts half-year results

Legal & General said in a statement today that its operating profit from divisions had gone up seven percent to £1.06 billion in the first half of the year. The group’s earnings per share, however, dipped eight percent to 13.00p, impacted by financial markets, while the company’s return on equity came in at 20.3 percent, as compared with 26.7 percent in the prior-year period.

“We expect to have an exceptionally busy H2,” L&G’s chief executive Nigel Wilson commented in the statement, adding that the group was “currently actively quoting on over £20bn of UK pension risk transfer deals, including over £7 billion of transactions in exclusive negotiations expected to close in H2”. The blue-chip insurer announced a dividend per share of 4.60p, up from 4.30p a year ago.  

Analysts weigh in on update

The Times quoted Paul De’Ath, an analyst at Shore Capital, as commenting that L&G’s outlook was positive as “the structural growth opportunity from bulk annuities is set to be around for some time to come”.

The newspaper also quoted Bernstein analyst Edward Houghton, as commenting on the group’s confidence that it could sign a large number of pension transfer deals, noting that “that level of volume would speak to the quality of the franchise and the durability of at least some competitive advantage”.

As of 14:04 BST, Thursday, 09 August, Legal & General Group Plc share price is 261.60p.

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