L&G sees core operating profit of £849m in H1’24, expects it to grow by mid-single digits y-o-y

Legal & General reports a “stable operating performance” in the first half of 2024, with core operating profit of £849 million slightly ahead of the £844 million reported in the same period the year prior.

Profit after tax stood at £223 million in H1 2024, which compares to the £377 million seen in the second quarter of 2023.

The firm’s Institutional Retirement segment supported £560 million to this period’s operating profit, a figure that compares to H1 2023’s £530 million.

According to L&G, this 6% increase was underpinned by the growing scale of backbook earnings and the consistent investment performance of its annuity portfolio.

“Following a record year for UK Pension Risk Transfer (PRT) in 2023, H1 volumes reflect lower quoting activity in the wider market. In H1 we have written £1,543m of global PRT (H1 2023: £4,992m). Despite the slower start to the year, we have now written or are exclusive on £5bn and our pipeline for PRT is larger than ever. We continue to expect elevated PRT volumes over the next decade,” the firm stated.

Asset Management saw a 14% decrease in H1 2024, from £249 million in H1 2023 to £214 million reported for this year’s first half, this reflects the increased investment. according to L&G.

The firm also noted that the increase in revenues, of 6%, reflects “a conscious shift towards higher margin business illustrated by UK DC and Wholesale, despite lower average AUM. Pemberton continues to make good progress in raising and deploying capital. This has been reflected in a valuation uplift which is lower than the prior year.”

L&G’s Retail segment grew 6% in H1 2024, to £268 million from £252 million seen in the same period last year. This growth was driven by Retail Retirement, up 13%, from £144 million at H1 2023 to £163 million at H1 2024, due to the unwind of a larger back-book which reflects strong 2023 performance.

Retail Annuity sales continue to be strong, with volumes in H1 2024 of £1.2 billion, double that of the prior year. Workplace DC net flows were £3.2 billion and total members are now up to 5.3 million.

António Simões, Legal & General CEO, commented: “These results reflect the ongoing strength of our business, with core operating profit slightly ahead of the prior year and a solvency coverage ratio of 223%. We continue to expect 2024 core operating profit to grow by mid-single digits year-on-year.

“At our Capital Markets event in June we set out our strategy to deliver L&G’s next phase of sustainable growth and enhanced returns, through focused capital allocation and rigour in execution. We are pleased to announce a 5% increase in interim dividends per share, and progress in undertaking a £200m share buyback, consistent with our new capital return framework.

“We are making clear progress on delivering against our strategy, notably in the establishment of a single asset manager. We have good momentum in private markets, launching a new fund to offer diversified exposure to Defined Contribution pension scheme members, and establishing our affordable housing fund, leveraging pension capital to build new homes.”

He concluded: “These developments are important steps forward for L&G, reflecting our commitment to helping address the long-term investment needs of individuals and society, and create compelling opportunities for partners to invest alongside us to generate positive change.

“We are encouraged by the action being taken here in the UK to drive institutional capital towards productive assets, alongside progress on addressing structural barriers to investment, such as the planning system. Looking ahead, we are well positioned to continue to execute our strategy with pace and ambition, delivering growth and value for all our stakeholders.”

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