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Auto-enrolment sales boost L&G profits to over £1bn

Legal and General LG 480

Strong protection and individual annuities sales at Legal & General have seen the insurer post a pre-tax profit of £1.04bn and boost its dividend by 20 per cent to 7.65p per share.

L&G’s preliminary results for 2012 show pre-tax profit is up 9 per cent from £953m in 2011.

UK protection sales rose 25 per cent from £177m in 2011 and £221m in 2012. Retail protection sales increased 15 per cent from £131m to £151m, which L&G attributed to its automated underwriting processes. Group protection sales were up by 52 per cent from £46m to £70m.

Individual annuities sales grew by 26 per cent from £105m to £132m, as the company says it attracted more pensioners with higher average fund levels.

L&G’s savings business rose 15 per cent from £1.3bn to £1.5bn, which the company says is being driven by pension scheme reorganisations as a result of auto-enrolment. Assets on its workplace platform grew 58 per to £6bn from £3.8bn, and its Investor Portfolio Service platform grew to £8.6bn from £6.8bn.

But bulk annuity sales fell 30 per cent from £146m to £102m, with £35m from the Tate & Lyle pension scheme in 2012. L&G’s 2011 bulk annuity sales included £110m from the Turner & Newell pension scheme.

L&G says it delivered its RDR platform proposition in November which is used by its building society partners including Nationwide, Yorkshire Building Society, Leeds and Principality. But as of last month building societies who use L&G’s bancassurance platform could not facilitate adviser charging on regular premium business.

The company has backed the FSA’s investigation into annuities, announced in January, saying in 2012 over 75 per cent of its individual annuity sales came from other pension providers.

L&G group chief executive Nigel Wilson says: “L&G’s double-digit sales growth in 2012 broke records, again demonstrating customers value our insurance, savings and investment propositions. An uncertain, sluggish economy has had minimal impact.

“The more important growth drivers for us are ageing populations, falling state spending on welfare and new long-term investment opportunities as banks retrench.”

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