Legal and General expect the lifetime mortgage market to grow to more than £2.3bn by 2019 leading to the doubling of the insurer’s new business target for 2015.
Legal and General bought Newlife Home Finance, a provider of lifetime mortgages, in April, and subsequently rebranded the proposition as Legal and General Home Finance.
In the insurance giant’s latest set of results, Legal and General announced it now expects to write about £200m of lifetime mortgages new business this year and increasing amounts thereafter, following its May prediction of writing £100m of lifetime mortgages this year.
Lifetime mortgage sales were £37m in the first half of this year.
Meanwhile, L&G’s operating profit rose 18 per cent on a year ago to £750m in the six months to the end of June.
The results also revealed the insurer will pay an interim dividend of 3.45 pence a share, up 19 per cent from a year earlier, despite “subdued” annuity sales.
Individual annuity sales were down 53 per cent in the first half of this year to £180m, compared with £383m for the first half of 2014. Bosses warned they expect the individual annuity market to decline further.
The insurer also reported bulk annuity sales for the first half of 2015 were £1.15bn, down from £3,135m for the first half of 2014.
The insurer stated it is increasingly using reinsurance to optimise our return on capital in this market and have reinsured £5.4bn of longevity risk and selectively used asset reinsurance in relation to the large bulk annuity transactions completed in the last 18 months.
The insurer stated it was doing well with automatic enrolment and by the end of 2015 will provide pension schemes to 30 of the largest high street retailers.
Alongside this, Legal and General reported the number of companies using the worksave pension plan aimed at small and medium-sized businesses, has grown by more than 25 per cent during the first half of 2015.
Total defined contribution assets increased by 15 per cent to £42.8bn for the first half of 2015, compared with £37.2bn for the first half of 2014, including net flows of £1bn, compared with first half of 2014 net flows of £1.1bn.
This includes workplace savings assets up 38 per cent to £13.1bn with net flows of £0.9bn.
emma.hughes@ft.com
