We're in good health, says Legal & General

The group's shares raced 5 per cent higher as the group declared itself to be in "excellent health". L&G swung out of the red with underlying pre-tax profits of 1.07bn against losses of 1.49bn in 2008, while operating profits soared 87 per cent to 1.1bn.

The group helped offset a 7 per cent decline in sales with tough action on costs, which saw it slash its UK workforce by 17 per cent last year.

L&G said the turnaround in its savings business was ahead of schedule, after the division returned to profit in the second half of 2009 following a tough recession for the group. Its general insurance business is also now delivering healthy returns, according to the firm.

But the group sounded a note of caution as it warned the "recovery in the UK economy in 2010 is likely to be slow".

"The housing market is expected to remain depressed this year and this will impact sales of mortgage related protection products," it said.

Unemployment is also unlikely to fall this year, which will restrict growth in its markets, according to L&G.

But the group added: "Returning employer confidence will drive growth in the group protection market.

"New systems implementations are expected to drive further efficiency gains in the protection businesses."