L&G reports profits down 26% to £912m last year, having assumed another longevity charge of £269m.
So it’s definitely not a case of ‘Live long and Prosper’ when measured on an EEV [European Embedded Value] basis, and worse still if International Financial Reporting Standards are used – indicating a drop of 56% to £718m.
Group Chief Executive, Tim Breedon, reported that the £269m allowance for an ageing population were in line with FSA and Pensions Regulator views as well as L&G’s own experience.
In addition, 2006 was viewed as an exceptional year to compare with 2007 compounded with flood claims damaging the chances of 2007 ever being a good year.
Breedon noted, “In bonds we suffered in the second half due to volatility and uncertainty” – this being around the equity markets and capital gains respectively. “…it will end up reducing choice for savers and potentially savings over all.”
His outlook for the bond market was gloomy; predicting a 20% decline in the next six months.
L&G’s progressive dividend policy continues unabated with full year rising to 7.6% to 5.79p L&G announced a new fund of funds operation taking a £400m transfer from Bradford & Bingley. Its acquisition of Nationwide Life and Nationwide Unit Trust Managers has tied up Nationwide’s distribution as from last month.
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