Legal & General has increased its interim dividend 25 per cent despite operating profits falling by £64m in the first half of 2011.
Results for the first six months of 2011 show pre-tax profits fell 12 per cent from £537m in the first half of last year to £473m in the corresponding period this year.
However, group chief executive Tim Breedon (pictured) says a 19 per cent increase in operational cash generation, from £417m in H1, 2010 to £498m this year, has allowed the insurer to boost its dividend from 1.33p per share to 1.66p per share.
He says: “Continued strong cash generation and confidence in our future prospects has led the board to increase the interim dividend by a further 25 per cent to 1.66p per share.
“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 15 per cent from £61m in H1, 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 provider’s savings investments business, which includes unit trusts and Isas, structured products, L&G’s investment platform business and uninsured Sipps, dropped from £14m in the first six months of 2010 to £13m this year.
Total new business in savings investments grew 8 per cent, from £3.43bn in H1 last year to £3.71bn in 2011. This figure was driven by a 71 per cent increase in sales on the firm’s investment platform, IPS, from £620m in H1 last year to £1.06bn this year.