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Legal & General 2018 operating profit rises 10%

Reuters with CNBC.com
Key Points
  • British life insurer Legal & General posted a 10 percent rise in operating profit to 1.9 billion pounds ($2.5 billion) in 2018, helped by record sales of annuities, it said on Wednesday.
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Britain's third-largest insurer Legal & General posted a 10 percent rise in operating profit to 1.9 billion pounds ($2.5 billion) in 2018, helped by record sales of annuities, it said on Wednesday.

L&G sold 10 billion pounds of annuities, most of them through the bulk annuity market, in which companies offload the risk to insurers of their defined benefit, or final salary, pension schemes.

The bulk annuity market is expected to reach record levels this year, with some analysts estimating sales of 30 billion pounds.

Nigel Wilson, chief executive of Legal & General, told CNBC Wednesday that reaching that number was a "wonderful achievement."

"One of the key things is that became the U.K.'s first trillion pound asset management business which is a wonderful achievement by my colleagues," he told CNBC's "Squawk Box Europe."

"And it's about consistency, consistency of strategy, consistency of delivery. Pretty much for the last 10 years we've been averaging 10 percent growth in operating profit and earnings per share and a 22.7 percent return on equity is hardly shabby in these very difficult low interest rate environments," he said, "I'm really pleased overall with the results."

Chief financial officer Jeff Davies told a media call that the firm has "a good outlook for 2019 across annuities and asset management."

The firm was actively quoting on around 20 billion pounds in bulk annuity deals, he added.

Legal & General Investment Management, one of the biggest investors in the U.K. stock market, saw a three percent rise in assets under management to 1 trillion pounds.

The profit numbers, in line with company-supplied consensus forecasts, exclude the release of longevity reserves made possible by a slowdown in life expectancy improvements, the life insurer said in a statement.

The company said it would pay a total dividend of 16.42 pence, up seven percent and in line with forecasts.