However, the shares dipped lower on Wednesday after the firm’s business lines outside of annuities came in below market expectations, according to analysts at Hargreaves Lansdown.
For the six months, the FTSE 100 firm reported operating profits of £1bn, up from £909mln a year ago, with the interim dividend rising to 4.93p per share from 4.6p.
The deal with Rolls, which saw the engine maker’s pension fund transfer assets and liabilities of around 33,000 pensioners, helped boost L&G’s pension risk transfer sales to £6.7bn in the period compared to £735mln in the first half of 2018.
The company’s individual annuity sales rose 47% to £497mln, while direct investment surged 36% to £22.2bn. L&G’s assets under management were also up 15% at £1.13bn.
Looking ahead, L&G’s chief executive Nigel Wilson said the group’s second half had “started well” with a £4bn deal with Oxford University Future Cities as well as a US$50bn Japanese global index win alongside the contract with Rolls.
The CEO added that the group was “on track” to deliver an earnings per share (EPS) compound annual growth rate (CAGR) of 10% per year “out to 2020”.
Wilson also said that the group was “confident” in the resilience of its balance sheet and operations for what it said was a “foreseeable range of Brexit outcomes”.
This wasn’t enough to placate investors, however, with the shares sliding 0.9% to 243p in early trading.
Richard Hunter, head of markets at interactive investor, said that the weak reaction in the shares was “somewhat symptomatic” of L&G’s problems convincing the market of its longer term potential, adding that the stock had fallen around 6% over the last year.
He added that with the company striving to lessen its reliance on the UK market and spread its risk wider geographically, the market consensus of the shares as a ‘hold’ was “likely to remain in place”.
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