Pension firm Legal & General hails ‘good start’ to 2022 as fund arm raises more than £50bn of investor cash

  • L&G’s products include life insurance, pensions and individual savings accounts
  • Pension risk transfer (PRT) volumes at the firm’s pensions division rose by £1.4bn
  • The group has pledged to invest billions in housing over the next 5 years

The Legal and General Services (L&G) division reported a good year, following strong performances across all business units.

The financial services group, whose products include life insurance, pensions and individual savings accounts, said it expects to report “double-digit” growth in cash and capital in the first half of 2022.

Performance was particularly impressive in the company’s investment management segment, which saw net outward inflows rise from £26bn in the first six months of last year to more than £50bn this time.

Forecast: Financial services firm Legal & General said it expects to report “double-digit” growth in cash and capital in the first half of 2022

He attributed this phenomenal expansion to growth in higher-margin areas such as fixed income, multi-asset funds and thematic exchange-traded funds, as well as a healthy level of international business.

Pension risk transfer (PRT) volumes in the firm’s pensions arm also grew significantly, increasing by £1.4bn to £4.5bn, thanks to strong performances from both the UK and international pensions businesses.

During this period, L&G secured a follow-on deal worth more than £2 billion with a major UK pension scheme and agreed its largest-ever deal in the United States.

In a further blow, two buy-ins – worth about £595m between them – were agreed to pension schemes owned by Britain’s Heathrow Airports Authority and Rubbermaid, a subsidiary of consumer goods maker Newell Brands.

The FTSE 100 company said demand for PRTs was rising as pension deficits narrowed as central banks raised interest rates and credit spreads widened, allowing funds to consider de-risking their portfolios.

Further growth has been reported at L&G’s alternative asset origination platform, which has seen revenues at its CALA Homes business rise from around £90m to £700m on the back of a rise in property sales.

Building: L&G's retirement and institutional arm has pledged to spend £2.5bn on building homes to rent and a further £2bn on affordable homes by 2027.

Building: L&G’s retirement and institutional arm has pledged to spend £2.5bn on building homes to rent and a further £2bn on affordable homes by 2027.

Housing schemes have gradually started to make up a bigger part of L&G’s business, with the London-based group making a number of major financial commitments in recent months.

Over the next five years, its pensions and institutional arm has pledged to spend £2.5bn on building homes to rent and a further £2bn on affordable homes.

And as part of a collaboration involving Lovell Partnerships, L&G’s affordable homes division has pledged to build 3,000 multi-ownership properties by 2027.

Chief executive Sir Nigel Wilson said the company’s encouraging performance “reflects solid execution of our stated strategy – which is closely linked to long-term structural growth drivers such as an aging population, investment in the real economy and tackling climate change – both in the UK and, more recently time, in the USA”.

He added: “The Group’s overall exposure to inflation is minimal and our balance sheet is strong, with recent solvency enhancements providing additional security and opportunity. We remain confident in Legal & General’s ability to sustainably grow earnings and deliver attractive returns over the long term.”

Legal and General Group shares closed up 3.8 percent at 242.1 pence on Thursday, although its value has fallen more than 21 percent over the past six months.

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