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Legal & General operational cash bolsters dividend despite profit fall

Legal & General has raised its interim dividend by 25 per cent despite profits falling by 12 per cent in the first half of 2011 to £473m from £537m last year.

Group chief executive Tim Breedon says a 19 per cent increase in operational cash generation from £417m to £498m has allowed the firm to boost its dividend from 1.33p per share to 1.66p per share.

He says: “We remain confident in our business model and strategy. Our leading positions in UK savings, annuities, protection and asset management are delivering healthy returns for shareholders.

“Sales volumes continue to grow and we are developing attractive new businesses both in the UK and internationally.”

Individual annuity sales fell by 15 per cent from £61m in the first six months of last year to £52m this year. L&G says this comparison is skewed by a strong annuity market last year following the Government’s decision to increase the minimum retirement age from 50 to 55.

Operating profits in the savings investments business, which includes unit trusts and Isas, structured products, the investment platform business and uninsured Sipps, fell from £14m to £13m.

Total new business in savings investments grew by 8 per cent from £343m to £371m.

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