Legal & General posts punchy results with AUM at record high

7th May 2014 08:08

- AUM up five per cent- Net cash up 21 per cent to record high- Operating cash up six per cent to record highA bullish Legal & General posted record first-quarter results, with cash flowing strongly and assets under management (AuM) at an all-time high. Thanks to net flows of £3.8bn in the quarter, AuM at Legal & General Investment Management (LGIM) rose 5% year-on-year to £463bn. Net cash jumped 21% and operational cash 6%, both at their highest-ever levels. Group Chief Executive Nigel Wilson said: "We already benefit from favourable demographic trends; we have economically and socially useful products for customers; and with our LGIM economists forecasting 3% plus economic growth in the UK and US, we are excited about the prospects for our business."The group's record annuity sales were driven by the UK's largest ever bulk purchase annuity transaction, the £3bn deal for the ICI Pension Fund, helping Legal & General Retirement new business premiums quadruple to £3.3bn.Individual annuity sales were down 40% to £244m, including a £15m impact from cancellations during the extended cooling off period which was offered to customers post the budget.Total annuity assets increased to £38.3bn from £33.3bn, reflecting record net inflows of £2.8bn for the quarter.Although many investors feared for the group's future following the Budget changes to the annuity market, the price cap on auto-enrolment default funds and the FCA review of legacy business, the group said it welcomed the government's "pro-choice, pro-consumer agenda to modernise pensions", which it said it expected would accelerate the evolution of a modern pensions market in the UK. Wilson was bullish about L&G's offering. He said: "There is strong demand for our pension de-risking and protection products in both markets - the £1.8trn of UK defined benefit liabilities will provide substantial future business. We believe the UK defined contribution market will grow from around £250bn today to £3trn by 2030."Broker Shore Capital said: "Not only are the numbers reported by Legals pretty punchy ... [but] the tone is resilient, upbeat and optimistic. This statement should start to unwind the underperformance recorded by Legal's stock over the past few months and we expect the shares to respond favourably this morning."Shares in L&G were up 2.3% to 218.45p at 08:35 on Wednesday.OH