L&G's sales growth disappoints

4th May 2011 08:24

First quarter sales at insurance titan Legal & General came in below expectations, but cash generation was strong and ahead of target.Worldwide sales on an annualised premium equivalent (APE) basis in the first quarter rose 12% to £433m from £388m the year before, but were below market expectations, where the median forecast was £442m, albeit in a broad range spanning from £353m to £477m. Net cash generation was 18% higher than a year ago at £212m (Q1 2010: £179m). "We are ahead of our plans to generate £700m of net cash in 2011," said group chief executive Tim Breedon.The investment management arm, LGIM, saw assets under management rise 8% to £356bn from £330bn, while savings assets were up 12% to £65bn from £58bn the year before.LGIM saw net inflows of £2.6bn, 27% of the total it achieved in the whole of 2010. New funds on a gross basis dipped 4%, however, to £10.81bn from £11.25bn in the first quarter of 2010.The group remains optimistic about the prospects for its markets this year and beyond. "Momentum in Savings continued with 20% growth in sales and positive net flows of £0.6bn. As expected, growth returned to the protection business with sales up 14% and in-force premiums up 7%. Annuity sales were down in the face of weaker market volumes," said Breedon. "Elsewhere, we are continuing to make good progress on a number of key projects. The US capital management programme is proceeding to plan and international new business in LGIM is ahead of our plans. Roll out of our workplace savings platform continues with a number of large UK companies deciding to move their pension arrangements to Legal & General. Our Retail Distribution Review [RDR] project is entering its implementation phase with a number of business partners signed up for post-RDR distribution agreements," Breedon added. ---jh