L&G hikes dividends 35% and invests in RDR-ready platform model

Legal & General (L&G) has increased its full year dividend by 35% as well as revealing a 5.3% increase in operating profits for 2011.

Tim Breedon
Tim Breedon

L&G is offering a full-year dividend of 6.4 pence per share, compared to 4.75 pence in 2010.

Full year operating profit stood at £1,056m, up from £1,002m in 2010. However, on an IFRS basis, profit before tax fell 12% from £1,092m in 2010 to £956m in 2011.

L&G also reported a 12% increase in cash generation from £840m in 2010 to £940m in 2011.

L&G says that it is looking to take advantage of the implementation of the retail distribution review (RDR) across a number of its business avenues. It says the late publication of the final rules has seen it invest in the development of its platform model to “reflect substantial changes to distribution processes and product fee and remuneration structures”. L&G says it hopes to have an “efficient end-to-end business model” post-RDR. L&G says the number of assets and customers on its IPS platform has increased markedly in 2011. The firm says it now has 420,000 customers, compared to 152,000 in 2010, this includes the migration of 215,000 customers from legacy portfolios onto IPS. (article continues below)

In November, the Telegraph reported that L&G had made an approach for Cofunds and it is understood that talks are continuing between the two firms. L&G currently owns a 25% stake in the platform.

The group also says it hopes to take advantage of opportunities in both the annuity and protection market post-RDR.

On increasing its protection market share, the group says it does anticipate some disruption to the market from regulatory changes, such as gender pricing and tax changes, but is looking to minimise those concerns.

Tim Breedon, chief executive of L&G, says: “Legal & General had a strong 2011. All four of our operating business divisions – risk, savings, investment management and international – delivered increased sales, cash generation and profits. Our balance sheet is strong, and our outlook for 2012 positive.

“L&G has significant scale: seven million customers and assets under management of over £370 billion. Our broad product range, diversified distribution and ability to deliver will enable us to grow the business, further enhance shareholder value, and take advantage of the opportunities created in a fast-changing market.”