Pension provider Legal & General hails ‘good start’ to 2022 as fund division pulls in over £50bn of investor cash
- L&G’s products include life insurance, pensions and individual savings accounts
- Pension risk transfer (PRT) volumes in the firm’s retirement arm grew by £1.4bn
- The group has pledged to invest billions in housebuilding over the next 5 years
Legal & General (L&G) has revealed a ‘good start’ to the year following solid showings across all divisions of its business.
The financial services group, whose products include life insurance, pensions and individual savings accounts, said it expects to report ‘double-digit’ increases in cash and capital generation for the first half of 2022.
Performance was especially impressive in the company’s investment management segment, which saw external net inflows surge from £26billion in the opening six months of last year to over £50billion this time around.
Forecast: Financial services firm Legal & General said it expects to report ‘double-digit’ increases in cash and capital generation for the first half of 2022
It attributed this phenomenal expansion to growth in higher-margin areas such as fixed income, multi-asset, and thematic exchange-traded funds, as well as healthy levels of international business.
Pension risk transfer (PRT) volumes in the firm’s retirement arm also grew strongly, climbing by £1.4billion to £4.5billion, thanks to solid performances from both its UK and international pension businesses.
During the period, L&G gained a follow-on transaction valued at over £2billion with a major UK pension scheme and agreed to its largest-ever deal in the United States.
An additional bump came from agreeing two buy-ins – worth around £595million between them – with the pension schemes of London Heathrow Airport and Rubbermaid, a subsidiary of consumer products manufacturer Newell Brands.
The FTSE 100 company said that PRT demand is rising due to pension deficits being reduced by central banks hiking interest rates and widening credit spread allowing funds to consider curtailing risk in their portfolio.
Further growth was reported in the L&G’s alternative asset origination platform, which observed revenues in its CALA Homes business rising by around £90million to £700million on the back of higher property sales.
Housing schemes have begun forming a progressively greater part of L&G’s business, with the London-based group making a number of large-scale financial commitments in recent months.
Over the coming five years, its retirement and institutional division has pledged £2.5billion of funds into build-to-rent homes and another £2billion to building inexpensive properties.
As part of a tie-up involving Lovell Partnerships, L&G’s affordable homes arm has also promised to construct 3,000 multi-tenure properties up to 2027.
Chief executive Sir Nigel Wilson said the results ‘reflects the strong execution of our stated strategy – which is closely aligned to long-term structural growth drivers such as ageing demographics, investing in the real economy, and addressing climate change – both in the UK and, more recently, in the US.’
He added: ‘The Group’s overall exposure to inflation is minimal, and our balance sheet is strong: the recent increase in solvency provides further security and optionality.
‘We remain confident in Legal & General’s ability to grow profits sustainably and at attractive returns over the long-term.’
Legal and General Group shares were trading 3.4 per cent higher at 241.2p during the late afternoon on Thursday, although their value has declined by over 21 per cent in the past six months.