L&G gets retail investor boost in 2009

Legal & General(L&G) saw its UK savings division weather the storm in 2009, with new business APE up 3% to £907m from £879m the previous year.

Its UK risk division did not fare so well, with new business APE down 25% to £366m (£488m in 2008), with L&G citing the contraction in the bulk purchase annuity market for the fall. Protection new business APE was down 13% compared to 2008 and total annuities sales slumped 34%.

Individual annuities sales grew 13% to £98m, compared with £87m in 2008, but the pension buy-out market was depressed by market conditions and plunged 55%.

Individual protection new business was down 12% (from £140m to £123m), although L&G says it has retained its number one position and outperformed the reduction in housing transactions. Group protection new business fell from £67m in 2008 to £57m - a decline of 15%.

L&G performed strongly in the retail investments sphere, as APE sales rose 64% to £375m thanks to unit trust and structured products sales surging 69% and ISA sales growing by 51%.

L&G also says there has been "considerable demand" for its Dynamic Bond Trust and underlined the shift to higher margin, actively managed products.

Retail investment assets increased 43% to £13bn, with net fund flows rising from £0.4bn to £2.1bn. Structured products accounted for 27% of total new business flows of £3.6bn.

Meanwhile, overall sales of with-profit products were flat on last year although with-profits bond sales remain robust, rising 96% as investors sought refuge in turbulent market conditions.

In the international sphere, new business was down 3%, from £119m to £115m, with new business in the Netherlands declining 24%.

"In 2009 I set a target to deliver £450m of net cash from our UK businesses," says group chief executive Tim Breedon.

"Ongoing changes to product mix and design, cost reductions, favourable pricing conditions in the annuity market and substantial growth in assets under management have delivered results well ahead of expectations, with in excess of £650m of net cash generated in 2009."