Legal & General Group PLC (LSE:LGEN) said in a trading update today that it expects to deliver “double-digit growth” in cash and capital generation in the first half of fiscal 2022.
The mortgage and pension provider reiterated its prior guidance for the full year 2022, indicating that it is on track to achieve £1.8bn of capital generation for the year as a whole.
"Our year-to-date operating performance is in line with expectations, with cash and capital generation running slightly ahead of our five-year ambition and ROE at c20%,” Legal & General’s chief executive Nigel Wilson said in the statement.
“This reflects the strong execution of our stated strategy—which is closely aligned to long-term structural growth drivers such as ageing demographics, investing in the real economy, and addressing climate change—both in the UK and, more recently, in the US.”
The buoyant outlook follows strong growth in the insurer’s pension risk transfer portfolio. It conducted £4.5bn of pension risk transfer transactions in the six months through to 30 June 2022, the majority of which remained in the UK market, up from £3.1bn in the first half of last year.
Legal & General grew its international pension business seven-fold to £700mln in the first half of this year, during which time its UK pension risk transfer transactions increased 27% to £3.8bn.
It conducted a £370mln buy-in with Heathrow’s British Airports Authority Pension Scheme to secure benefits for its 1,400 or so retirees, as well as a buy-in with the Newell Rubbermaid UK pension scheme.
“We have a strong pipeline for the second half of the year and into 2023,” said Wilson. “Demand for global PRT [pension risk transfer] is growing, as rising interest rates and widening credit spreads reduce pension deficits and allow more funds to consider de-risking.”
Wilson said the group’s exposure to inflation is “minimal” and that Legal & General is confident it can grow profits “sustainably”, achieving external net flows of more than £50bn in the first half of this year through its Legal & General Investment Management portfolio, nearly double the £26bn generated a year earlier.
Its shares were up 2.87% in early morning trades (by 08:38).