(Bloomberg) -- Legal & General Group Plc reported operating profit that almost met estimates even as clients pulled £31.3 billion ($40 billion) from its asset management arm in the first half of the year due to adjustment of portfolios by its defined benefit clients.
The London-based insurer said in a statement Wednesday that its operating profit for the six months through June was £920 million ($1.17 billion), close to the Bloomberg consensus of £923 million. Core operating profit improved less than 1% from a year earlier to £849 million, but Chief Executive Officer António Simões said it’s expected to grow by mid-single digits.
The firm announced a half-year dividend of 6 pence a share, which was 5% higher than last year, a move Quilter Plc analyst Tom Gilbey said reflected “its confidence in its future growth potential.”
JPMorgan Chase & Co. said in a research note that the operating profit beat its own estimates, while management fees suggested a “significant improvement” in AUM margins. Hargreaves Lansdown analyst Matt Britzman wrote that “record levels of retail annuity business” helped drive operating profit.
Shares of the company remained little changed in early London trading on Wednesday.
Simões, who took over as CEO in January and reorganized the firm’s asset management units earlier this year, has set out a new course for the insurer, including a plan to expand its private-markets platform to £85 billion by 2028, from the reported £52 billion at the end of June.
The latest outflows brought total assets under management to £1.14 trillion, from £1.17 trillion in the same period last year. Analysts in a Bloomberg survey had expected £10.4 billion of outflows from the investment management unit.
Simões said in a post-earnings call that outflows were generally in low-margin businesses. “It’s a complex dynamic,” he said. “As long as outflows are in low margin products and inflows are in high margin, we’re happy.”
The provider of life insurance, pensions, retirement and investment services reported a retail operating profit of £268 million.
--With assistance from Paul Jarvis.
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