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L&G savings business is ‘beginning to motor’

Legal & General group chief executive Tim Breedon says he remains confident about growth prospects in the UK after the company increased its final dividend by 25 per cent to 3.42p per share last week.

The group’s preliminary 2010 figures, published last week, revealed a modest 2 per cent increase in profits from £1,047m in 2009 to £1,092m last year. However, an 11 per cent rise in net cash generation over the period, from £726m to £808m, allowed L&G to boost its dividend payment.

Savings business saw a 130 per cent rise in IFRS operating profit from £50m in 2009 to £115m in 2010. L&G wrote over £1bn of individual annuity business for the first time last year as new business was boosted by distribution deals with Zurich and Saga.

Savings assets under management rose from £55bn to £64bn while annuity assets grew from £23bn to £25bn.

Legal & General Investment Management delivered record profits of £206m, up from £172m in 2009.

LGIM funds under management rose by 12 per cent to £354bn from £315bn.

Group chief executive Tim Breedon says the savings business is “beginning to motor”. He says: “We expect to see continued growth in individual annuity markets as more people retire with their defined-contribution pensions.

“Our savings business is beginning to motor and there is plenty of room to grow in the future. We have got the RDR and auto-enrolment in pensions coming up and we think we are well positioned for these reforms.”

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