Legal & General profits jump 27%

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Legal & General profits jump 27%
ByHannah Smith

Legal & General more than doubled net inflows into its asset management arm in the first half of the year, while a slowdown in life expectancy growth offered a boost to its insurance business.

The provider's results for the first half of 2017, published today (9 August), showed Legal & General Group saw a 27 per cent increase in operating profits to £988m.

Profits received a £126m boost from a slowdown in the long-term trend for longer life expectancy, as it reviewed its longevity assumptions.

Meanwhile, assets under management at LGIM rose 13 per cent to £951bn.

External net inflows into the asset management business were £21.7bn, up from £9.6bn in the first half of 2016.

LGIM saw a 15 per cent increase in revenues from management fees to £382m, driven by these strong inflows.

However, the group said this was partially offset by plans to expand in to target international markets.

Bosses said the business is well positioned to deal with the changes which will come to the industry from the FCA Asset Management Market Study, Mifid II and Brexit negotiations.

Looking forward to some of the risks facing its wider business, L&G bosses said they were conscious that political and policy uncertainties remain, pointing to debt levels in China, Brexit, and a potential contraction in global growth.  

The provider's management flagged the possibility of new entrants to the market bringing disruption with lower cost business models or more innovative services.

It also noted the threat of a cyber attack, saying a “material failure in our business processes or IT security may result in unanticipated financial loss or reputation damage”.

Legal & Geneal added it is continuing to invest in systems to manage this threat.

Group chief executive Nigel Wilson noted the group is not complacent about the challenges it faces.   

Mr Wilson said: “Our strategy, based around six long term macro and demographic growth drivers, not only allows us to grow L&G's business, but also the scale of our long term capital enables us to support inclusive growth across the UK.

"We are replicating our successful UK model with measured expansion in the US, where we are experiencing increasing customer acceptance and an ever improving financial performance.

"Our business model has proven to be resilient to political, economic and regulatory uncertainties. We are not being complacent as we recognise that there are currently some structural weaknesses in the UK economy.

"Notwithstanding this we have tremendous momentum across our business, a strong AA- rated balance sheet and increasing access to global growth opportunities, therefore we remain confident in our ability to deliver growth."