L&G ups Q1 sales by 3%

13th May 2009 07:20

Insurer Legal & General has reported a better than expected 3% increase in first quarter worldwide new business and a "modest" improvement in its IGD capital surplus from previous estimates.The company, which said yesterday it was cutting up to 560 jobs in its savings division, said worldwide new business on an Annual Premium Equivalent (APE) basis rose to £382m in the three months to 31 March from £372m a year ago.Sales in the UK risk business fell 10% to £127m, but rose in savings by 6% to £206m as growth in unit trusts offset lower sales of unit linked bonds.Gross new funds at investment management climbed 22% to £7.5bn from £6.1bn a year ago, although a drop in funds under management means it's likely that some pressure on fee income will persist in 2009, the group cautioned.L&G said its IGD surplus was £1.6bn, up from the £1.5bn estimated in March, with capital resources of £4.2bn and capital requirements of £2.6bn.The firm estimates that a 40% drop in equity markets would cut this surplus position by £600m, broadly in line with the year end 2008 sensitivity estimate."We are on track with planned cost reductions and have been increasingly prudent about the terms on which new business is written," said chief executive Tim Breedon."These actions to reduce expenses and new business strain will, we expect, support significantly higher net operational cash generation in 2009, particularly in the second half of the year."