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L&G destroying shareholder value says JP Morgan

JP Morgan has slammed Legal & General for plugging annuity business in a benign credit environment.

L&G’s share price slipped 8.1p after the investment bank published an underweight ratings report on Friday.

The report states: “L&G has been destroying shareholder value by expanding the annuity business in very benign credit environment.”

The poor rating came ahead of an investor day yesterday where L&G spoke to its biggest shareholders about its annuity business, which contributes to 78 per cent of its profits.

With regards to the meeting, the report states: “Our view is that L&G will have a rough ride giving a presentation on the economically loss making annuity business in these market conditions.”

JP Morgan also voiced concerns that L&G was running out of capacity due to its concentration in annuities, adding “we prefer business without the back book”.

L&G spokesperson Richard King says: “We see annuity business as profitable and we are not running out of capacity. We decide capacity on a risk basis and we are happy with our parameters.”

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