Legal & General (L&G) saw its profits after tax increase by 50 per cent to £1.9bn in 2017,helped higher by a huge rise in annuity sales.
In the previous year, the provider had profits before tax of £1.2bn, when it confirmed a loss on the sale of its platform Cofunds.
The company saw its operating profit increase 32 per cent to £2.1bn, from £1.6bn in the previous year.
One of the main contributors to this year’s results is the pension risk transfer and individual annuity new business, which achieved £4.6bn in 2017, £500m more than in the previous year.
In the individual annuity market, the provider had individual values of £4.4bn during last year, with an increase in annuity sale volumes of 78 per cent.
Individual annuity single premiums have grown from £378m in 2016 to £671 in 2017.
In its results the provider said: “Demographic changes will see our target market continue to grow, both in terms of the numbers of retirees and the levels of wealth they hold.
“We expect individual annuities to build on 2017 driven by our growing strengths in pricing, underwriting, marketing and distribution.”
In the institutional market, as defined benefit (DB) pension funds are reaching maturity, there is an increasing demand for risk transfer to insurers, the provider said.
The demand for this business remains strong, L&G said, with the company currently quoting £17bn of buy-in and buy-out deals in the UK.
In the equity release segment, L&G made lifetime mortgage advances of £1bn in 2017, up from £600m in the previous year.
With a 33 per cent market share in this market, the provider’s focus “is to continue growing the market by widening the range of products offered and routes to market utilised”.
L&G anticipates total lifetime mortgage market volumes of over £6bn by 2020, up from £3bn in 2017.
Nigel Wilson, the company group chief executive, said: "L&G’s strategic focus, alignment to global growth drivers and excellent execution, allowed us to deliver a record £2.1bn operating profit in 2017.
“Our shareholders are enjoying terrific earnings per share and return on equity growth, while our 'inclusive capitalism' model ensures customers and society also benefit.
“Customer focus and good value made us market leaders in our chosen UK business segments, while successfully expanding in the US where LGR broke new ground, completing fifteen pension risk transfer deals.”
According to Steve Clayton, manager of the Hargreaves Lansdown Select UK Income Shares fund, the provider “numbers look solid all round, with underlying earnings growth of 9 per cent and excellent capital generation that has seen a significant improvement in L&G’s already strong finances”.
He said: “The overall picture encourages, L&G has positioned itself to fill some of the gaps that are emerging in financial services markets as the pattern of savings and protection needs swings away from the state.”
maria.espadinha@ft.com
