Legal & General is set to incur £40m in restructuring costs in a bid to deliver £80m of cost savings this year.
In its half-year results, published today, the provider says it is pursuing a cost cutting strategy through the closure of non-core businesses as well as job losses and a review of its UK and US locations.
Money Marketing revealed in June that L&G is to close its flagship headquarters in Kingswood, Surrey, which employs 1,700 people on a 50-acre site.
Overall L&G has posted a £672m profit for the first half of the year, up 6 per cent from £636m at the same time last year.
L&G’s retirement arm made an operating profit of £280m, a year-on-year increase of 49 per cent from £188m. Profits were driven by reinsuring risks related to bulk annuity deals and a £31m gain from unreported deaths of deferred annuitants.
Individual annuity sales were down 53 per cent from £383m to £180m. L&G says while it expects the market to decline further, it expects its £43bn annuity back book to be profitable for another 15 years.
The company is looking to equity release as a growth area. It has written £37m in lifetime mortgages this year, and is targeting £200m in lifetime mortgage sales for the year.
Since April the provider has seen 3,000 choose to take cash payments from their pension, with an average payment of £12,000.
L&G Investment Management has posted an operating profit of £176m, up 18 per cent from £149m last year. This takes into account the workplace savings business, which is previously reported outside of LGIM.
Assets under management have gone from £640bn to £714.6bn.
Protection new business premiums have dipped slightly from £123 to £119m.
L&G’s platform business, which includes Cofunds, saw assets under administration grow 11 per cent from £67.4bn to £74.6bn as at 30 June. Cofunds is targeting an £11m annual cost saving by the end of the year.
Sipp provider Suffolk Life was boosted by a 15% increase in AUA from £7.2bn to £8.3bn.
L&G group chief executive Nigel Wilson says: “L&G continues to deliver strong organic growth in the UK and the US from both our developing and
established businesses. In addition we are disposing of, or closing non-core businesses and reducing costs in real and nominal terms.
The actions that we are taking allow us to focus on our chosen markets, enable us to continue to deliver low prices and better value for our increasing customer base and deliver attractive returns for our shareholders.”