L&G 'best positioned' to benefit from RDR

Legal & General is the best placed firm within the life market to benefit from the RDR and an increasing focus on asset management, according to analyst Nomura.

It says L&G already has the highest exposure to asset management in the European insurance sector, contributing to 21% of its earnings.

It further predicts this will grow to 37% by 2013 as a result of changes brought about by RDR.

In a note, Nomura says: "The RDR will require IFAs to charge fees instead of receiving commission by 2013, leading to improved quality of investment advice, in our view.

"This is already causing IFAs to sell more asset management products and fewer non-pension insurance savings products (eg unit-linked life), because the former are better suited to many consumers' needs (eg lower cost and more tax efficient), in our view.

"We think L&G is the best positioned of the UK life stocks to benefit from the RDR."

Nomura has raised its price target for L&G by 14% to 171p and increased its earnings forecasts by 7% for 2010 and 11% for 2011.

L&G's share price rose by 3.2% on Friday after the note was released, closing the week at 122.7p.