© Reuters. FILE PHOTO: The logo of insurance company Legal & General is seen at its office in central London March 17, 2008. REUTERS/Alessia Pierdomenico
By Carolyn Cohn
LONDON (Reuters) – Rising interest rates are helping Legal & General’s business, its chief executive said on Tuesday, as the British life insurer posted an 8 percent rise above forecasts in first-half operating profit and said it was on track to meet or exceed. your financial goals.
Markets have fallen this year as central banks have raised rates aggressively to control inflation.
But life insurers tend to profit from the higher interest rates, as it means they have to set aside less capital now to pay future pension payments.
“We are the beneficiaries of rising rates around the world,” Chief Executive Nigel Wilson told Reuters, adding that inflation was driven by energy prices, which were likely to ease.
“We will see inflation expectations come down from where they are now.”
L&G said its performance was driven by its massive annuities (insurance from the company’s defined benefit pension plans) and housing businesses.
Legal & General Investment Management, one of the biggest investors on the UK stock market, saw a big jump in third-party inflows to 65.6 billion pounds ($79.25 billion), more than double the flows seen in the first half of 2021.
L&G was attracting higher investment volumes compared to smaller peers, Wilson said, as savers and investors turned to bigger players to help them navigate tough economic conditions.
But assets under management fell 3% on the previous year to £1.29tn. The unit’s operating profit fell 2%.
Rival asset manager abrdn reported a 6% fall in assets under management and administration in the first half on Tuesday. But Schroders (LON:) posted a 1% year-on-year rise last month, helped by strong performance in alternative assets.
L&G’s operating profit of 1.16 billion pounds beat a consensus of 1.12 billion in a survey supplied by the company.
Shares in L&G were down 0.5% at 0729 GMT compared with a . KBW analysts described the results as “solid,” and reiterated their “market perform” rating on the stock.
L&G said it would pay an interim dividend of 5.44 cents a share, or 5%.
($1 = 0.8275 pounds)
($1 = 0.8277 pounds)