L&G to think small as it goes for growth

L&G said small deals in fund management or general insurance could help offset the “prolonged austerity” and macroeconomic shocks it expects across the world, particularly in the troubled eurozone.

“You’ll probably see some bolt-on acquisitions – the balance sheet is very strong and there are lots of assets for sale,” said CEO Nigel Wilson.

“We’ll retain our strategic and financial discipline, but there will be a lot more opportunities to accelerate our growth through bolt-on acquisitions.”

The 176-year-old insurer has traditionally taken a cautious approach to takeovers, spending about £300m on two deals during the last six years.

Britain’s fourth-biggest insurer said it should also benefit from rising demand for pension products in the UK, where many workers have not saved enough for their retirement.

L&G made an operating profit of £518m in the first six months of 2012, outstripping the £498m pencilled in by analysts.

The improvement reflected strong sales of corporate and housing protection insurance, driving a 15 per cent increase in profits in the risk division.

L&G hiked its interim dividend by 18 per cent to 1.96p a share.

“It’s tough out there, and they’ve produced numbers that are up a bit, but there’s not enough here to drive upgrades,” said Oriel Securities.

John Stewart, the former CEO of National Australia Bank, chairs the group.