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Legal & General’s Cash Flow Beats Estimates on Assets, Savings

May 02, 2013

Legal & General Group Plc (LGEN), the biggest manager of U.K. pension assets, said first-quarter cash generation rose 13 percent, beating analysts’ estimates, as its funds unit had record inflows and annuities sales rose.

Operational cash generation, a measure of earnings before dividends and reinvestment, climbed to 281 million pounds ($437 million) from 249 million pounds in the year-earlier period, the London-based firm said today in a statement. That beat the 272 million-pound average estimate of 14 analysts surveyed by L&G.

“The outlook for the business is strong, and will improve through broader economic growth and further international expansion,” Chief Executive Officer Nigel Wilson said in the statement.

Wilson, who took the role in June 2012, is looking for acquisitions as the company seeks to bolster its position in the U.K. pensions market, where the government is pushing more Britons to save privately. The firm agreed to buy Cofunds Holdings Ltd., an electronic savings portal, in March and is a candidate to buy Scottish Widows Investment Partnership, according to Numis Corp.

Sales rose 28 percent to 555 million pounds in the first quarter, beating analysts’ estimate of 499 million pounds. That included a 56 percent increase in sales of income protection and annuity products and a 20 percent gain in revenue from savings.

The firm had record international net inflows of 6.7 billion pounds into its investment management division, up from 1.2 billion pounds a year ago. Total assets rose 9 percent to 441 billion pounds in the quarter.

Scottish Widows

Lloyds Banking Group Plc (LLOY), the U.K.’s biggest mortgage lender, is looking to sell Scottish Widows, which manages about 142 billion pounds of assets, four people with knowledge of the matter said last month. With a large amount of index-linked funds, the business would fit with Legal & General’s investment management unit, according to David McCann, an analyst at Numis.

“As well as progressing our own organic and acquisition growth plans, we are engaging positively with the Bank of England, PRA and Treasury as we pursue several growth options through direct investments,” Wilson said, referring to the U.K.’s central bank, regulator and finance ministry.

To contact the reporter on this story: Kevin Crowley in London at

To contact the editor responsible for this story: Edward Evans at

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