15th Mar 2016 10:27
LONDON (Alliance News) - Legal & General Group PLC, the FTSE 100 life insurer and investment manager, on Tuesday said profit and cash generation improved in 2015, prompting a higher dividend, though future increases in the payment to shareholders will be more strongly informed by underlying business growth.
Pretax profit rose to GBP1.36 billion in 2015 from GBP1.24 billion in 2014, slightly ahead of company-supplied analyst consensus of GBP1.34 billion. Net cash generation grew by 14% to GBP1.26 billion, ahead of the GBP1.22 billion expected by analysts.
Legal & General lifted its total dividend per share for the year to 13.40 pence from 11.25p in 2014, beating the 13.34p expected by analysts, and it committed to a "progressive" dividend policy. Having been cut to 3.84p in 2009, a response to the financial crisis, the dividend has since been more than trebled by L&G.
In the past, dividend increases have been supported by L&G's policy of reducing its dividend cover ratio - meaning the multiple of net cash generated by the business to dividend payment. Net cash generation was 1.58 times the dividend in 2015, down from 1.65 times in 2014.
Speaking to journalists in a conference call, Chief Financial Officer Mark Gregory said the group now is "broadly happy" with its dividend cover ratio, with dividend increases to be "more strongly correlated simply to the underlying business growth".
The group posted a capital surplus of GBP5.5 billion over regulatory requirements under new Solvency II insurance rules in the EU, with a coverage ratio of 169%. Fellow FTSE 100 life insurers Prudential PLC and Aviva PLC previously reported Solvency II ratios of 193% and 180%, respectively.
"We have a robust business model which has proved to be adept and resilient in dealing with fiscal and regulatory changes in our sector. We are planning for more global economic and market volatility and are well positioned for continued pressure on pricing and changes in product mix in our industry," L&G Chief Executive Nigel Wilson said in a statement.
Shares in Legal & General were down 5.2% at 231.00p on Tuesday morning, one of the worst performers in the FTSE 100.
By Samuel Agini; [email protected]; @samuelagini
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