L&G sees workplace annuity premiums hit £3.1bn

Legal & General has seen a record rise in workplace annuities as it offsets the fall in individual annuity sales driven by the Budget pensions shake-- up.

The insurance group saw pre-tax profits jump 6 per cent to £636m in the six months to June 30, as bulk workplace annuity premiums more than quadrupled to £3.1bn.

The business also revealed that it took a £12m hit from the extreme weather and flooding that swept the country at the start of the year.

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Chief executive Nigel Wilson said the group performed strongly across its markets and has invested £5bn in major UK infrastructure projects to boost Britain’s recovery.

Legal & General said during the period it wrote the largest ever bulk annuity in the UK with the ICI pension fund, covering £3bn of liabilities.

By contrast the group said individual annuity sales were down 49 per cent to £383m, with the firm expecting 50 per cent falls in both the second half of the year and in 2015.

This comes after the Chancellor’s surprise announcement that retirees do not have to buy an annuity to draw their pen- sions.

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The group said many pensioners will not have saved sufficiently to fund their retirement, and the firm was looking into launching new mortgage products to release cash from their homes.

Last year, Legal & General was one of six major insurers to pledge a total of £25bn to fund major infrastructure projects in the UK.

The group reiterated its plans to help relieve the UK’s housing shortage by boosting the private rented sector.

As a result, Legal & General bought housebuilder Cala Group last year which in turn bought rival Banner Homes in March, with the insurer saying it planned to treble annual turnover from this part of the group to more than £800m by 2016.

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Mr Wilson said: “We have the scale and the skill to play a major role investing in the fabric of the UK to drive growth and competitiveness.”

The group also posted a 9 per cent rise in insurance premiums to £1.5bn and a 17 per cent jump in savings assets to £117.8bn, which prompted the firm to up its dividend 21 per cent to 2.9p a share.

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