The firm’s interim results, released today, reveal operating profit on an IFRS basis plunged 92 per cent to £31m in the first half of 2009, down from £391m in H1 2008.
L&G cites negative stockmarket variances for the significant fall.
On an EEV basis, operating profit actually increased 12 per cent to £657m, from £589m in the same period in 2008.
New business fell to £746m APE for the first half, down from £806m last year.
L&G strengthened its IGD surplus capital to £1.9bn in June before adding £300m of qualifying lower tier 2 debt securities issued in July, bringing the total to £2.2bn.
It estimates a proforma IGD coverage ratio of 192 per cent compared with 169 per cent quoted in the 2008 full year results.
The firm says it has no plans to launch a rights issue, following speculation from analysts, claiming it is comfortable with its enhanced capital position.
Group chief executive Tim Breedon says: “We have strengthened the balance sheet with proforma IGD surplus at £2.2bn and we expect to realise annualised cost savings of £50m by the end of 2009. IFRS operating profit has been reduced by £351m of negative investment variances in the period.
“The board has therefore decided to pay an interim dividend of 1.11p reflecting our growing confidence in cash generation and our continued determination to strengthen the balance sheet during the ongoing economic uncertainty while rewarding shareholders.
“Our focus remains on capital strength, net cash generation and cost reduction. As a group we benefit and continue to exploit substantial synergies between risk, savings and investment management to service our customers and create value for shareholders.
“Confidence has started to return to markets but we expect some continued uncertainty for the remainder of 2009. As a result of the actions we have taken in the first half of this year and will continue to take in the second half of the year, Legal & General is better positioned to take advantage of new opportunities to grow profitably as the economy recovers.”