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(Updates with analyst’s comment in third paragraph.)
Nov. 1 (Bloomberg) -- Legal & General Group Plc, the biggest investor in the U.K. stock market, said sales fell 0.7 percent in the first nine months of the year as the insurer gathered less revenue from insured savings and annuities.
Worldwide sales slipped to 1.34 billion pounds ($2.2 billion) in the period from 1.35 billion pounds a year earlier, the London-based company said today. That beat the 1.32 billion- pound estimate of Eamonn Flanagan at Shore Capital Plc, the joint top rated analyst on the stock over the last year.
The insurer “reported a strong third-quarter performance in terms of cash generation and new business, especially given the extreme volatility experienced in worldwide markets,” Flanagan, who rates the shares “buy,” wrote in a note today.
Legal & General is seeking to boost sales of savings and pension products as the U.K. government cuts its budget deficit and pushes its ageing population to provide for their own retirement. The firm has been hurt by the slowing U.K. housing market this year, as customers typically buy life insurance and income protection when they purchase a new home.
“We see a weak recovery from a deep recession,” Chief Executive Officer Tim Breedon said on a call with reporters. That’s due to “the structural elements that caused this particular recession in terms of indebtedness of the government and private sector,” he said.
Legal & General dropped 5.4 percent to 104.5 pence at 8:22 a.m. in London trading, outpacing the FTSE ASX Life Insurance Index’s 3.8 percent decline. Stocks tumbled in Europe this morning after Greece called a referendum, raising the prospect of derailing the most recent international bailout.
The insurer said net cash flow, which is used to pay dividends, rose 15 percent to 631 million pounds and is “significantly ahead” of its 700 million-pound target for the year.
Cash flow, which is generated from old policies running off and operating profits, “has been very steady over the first three quarters showing the strength and resilience of the business,” Finance Director Nigel Wilson said on a call with reporters.
The insurer is looking for a CEO to replace Breedon, who will step down at the end of 2012 after seven years in the role. Analysts including Shore Capital’s Flanagan say Wilson, who joined the firm in September 2009, is one of the leading candidates for the job.
Legal & General has “negligible” exposure to southern European debt, Breedon said on the call.
--Editors: Keith Campbell, Jon Menon.
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