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L&G doubles lifetime mortgage target; posts rise in profits

  • 05/08/2015
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L&G doubles lifetime mortgage target; posts rise in profits
Legal & General plans to write £200m worth of lifetime mortgage business in 2015, its interim results show.

This is double its original target of £100m as announced earlier this year.

As individual annuity sales at Legal & General plummeted by 53% in the six months to 30 June to £180m following the pension freedoms, L&G completed lifetime mortgage advances worth £37m.

Despite setbacks, operating profits at the group were up 18% in the first half to £853m, with profit after tax rising 8% to £574m on £507m in the first half of 2014.

L&G said it expected to write increasing amounts in its lifetime mortgage business after it acquired equity release provider New Life earlier this year. It said it expected the individual annuity sales market to decline further.

Sales in L&G’s bulk annuity division also tumbled 62% to £1.3bn from £3.5bn on the same period last year.

The group said its mortgage club and surveying business remained important components of its retail protection distribution model, with its network facilitating over £20bn of mortgages in the first half of 2015, a £2bn increase on a year earlier.

Survey completions increased by 92% at L&G’s surveying business, bringing the total to 240,000 in the first half of 2015.

UK protection gross premiums at L&G grew 4% in the first half to £774m, but its general insurance gross premiums dropped to £164m from £178m as the group said it maintained its pricing structure in an increasingly competitive market.

L&G added it planned to carry out further redundancies across its UK and US businesses to deliver savings of £80m as well as expected restructuring costs of £40m.

Nigel Wilson, group chief executive, said: “Legal & General continues to deliver strong organic growth in the UK and the US from both our developing and established, market leading businesses. In addition we are disposing of, or closing non-core businesses and reducing costs in real and nominal terms.

“The actions that we are taking allow us to focus on our chosen markets, enable us to continue to deliver low prices and better value for our increasing customer base and deliver attractive returns for our shareholders. This financial and strategic discipline is driving our sixth year of double digit growth in net cash, operating profit and dividends – particularly noteworthy in H1 was the diversity of the strong operational and financial delivery, with an 18% increase in operating profit to £750m, the 19% increase in dividend per share to 3.45p and the 19% return on equity.”

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