Legal & General has confirmed the loss it made on the sale of its platform Cofunds, as it posted overall profits of £1.6bn for 2016, lead higher by its retirement division recording.
There were record operating profits of £811m in Legal & General Retirement which the company attributed to higher levels of longevity reinsurance on new business.
Total new business for L&G's retirement arm was up 190 per cent at £8.5bn, with the strong demand for de-risking strategies cited as a reason for the division’s strong performance.
L&G said it is currently quoting on around £13bn of UK buy-in and buy-out deals.
In its results the company said: “The UK private sector defined benefit market is estimated to have £2.1trn liabilities, with only circa 5 per cent transacted to date.
“Two thirds of large pension plans expect to use pension risk transfer by 2020, and consequently our UK market pipeline for pension risk transfer remains strong.”
However L&G’s results include net loss on disposals of £60m, which includes a £64m impairment loss in relation to the sale of Cofunds and a £4m profit on the sale of Suffolk Life.
The company said that following its acquisition of Aegon’s annuity back book in May it expects there to be more consolidation opportunities among individual annuity providers but would only pursue these if they were attractive enough.
Nigel Wilson, chief executive of L&G, said: “We believe the UK remains a great place for us to help fill the huge funding gaps and under-provision of key financial products.
“We are playing our part to regenerate the UK's cities, delivering economic growth and jobs, capitalise on its world-leading universities and improve commercialisation of its scientific discoveries.
“We look forward to the future with confidence as our core markets are growing, our market share is increasing, our balance sheet is strong and we have positive cash and earnings momentum.”
Assets under management at L&G Investment Management were up 20 per cent to £894.2bn.
Operating profit for the division increased by 3 per cent to £366m, reflecting higher AUM growth later in the year, partially offset by investment to grow the business and ongoing fee pressure.
L&G’s defined contribution business saw net inflows of £2bn during the year and a 23 per cent increase in customers to more than 2.2m.
damian.fantato@ft.com
