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Legal & General increases provisions for COVID-19 deaths due to new variants

The pandemic reduced operating profits by £228mln in the year to end-December

Legal & General -

Legal & General PLC (LON:LGEN) said it had set aside a further £110mln for possible early deaths due to the new strains of COVID-19.

The FTSE 100 life insurance and pensions group said the pandemic reduced operating profits by £228mln in the year to end-December, which included £76mln for COVID-19- related claims.

L&G said it expects claims to rise in 2021 hence the new provision. New strains of the virus have been identified in the UK, South Africa, California and most recently Brazil.

The number of Britons dying from the virus rose sharply at the end of 2020 but has since fallen after the third lockdown and the roll-out of the vaccination programmes.

Most of the other COVID-19 costs related to its housing build to sell operation, which was paused during the lockdowns, and £27mln of additional operational costs, L&G said.

Operating profits across the group dropped 3% to £2.21bn in the year to end-December largely due to the extra pandemic costs with after-tax profits 15% lower at £1.79bn.

The dividend for the year was held at 17.57p, something Legal & General flagged last year when it said it wanted to grow payments by low-middle digits going forward.

L&G’s solvency ratio, a key measure of financial health, was 177% at the year-end but has since risen to 192%, it said.

Nigel Wilson, chief executive, said it was a robust and resilient performance during 2020.

“Our balance sheet remains strong, with the Solvency II coverage ratio currently over 190%, and trading remains consistent with delivering our growth ambitions which are supported by six long term growth drivers.“

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Market Cap: £16.72 billion

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