Profits at insurer Legal & General rose by more than a tenth last year as annuity sales soared and changes to life expectancy boosted the bottom line.
The rate of improvement in life expectancy in the UK has slowed dramatically, allowing insurers such as Legal & General to release some of the reserves they hold to pay future pensions.
On Wednesday, the company said it was able to release £433m of reserves last year, after releasing £332m the previous year.
It also reported a big jump in sales of bulk annuities, in which Legal & General takes pension assets and liabilities off other companies. The market grew last year as the funding position of many corporate pension schemes improved. The insurer completed £9.1bn worth of deals in 2018, up from £3.9bn in 2017.
Chief financial officer Jeff Davies said that the company had a strong pipeline of bulk annuity business, and was quoting on about £20bn of deals.
Overall, the company’s operating profit rose 14 per cent to £2.3bn. Without the mortality-related reserve releases, profits were up 10 per cent.
The dividend was increased by 7 per cent to 16.42p per share.
Chief executive Nigel Wilson said: “2018 saw political uncertainty, asset market declines and slowing economic growth, but we are resilient and performed strongly. We became the UK’s first £1 trillion investment manager, executed a record £9 billion of pension risk transfer deals and invested billions in the UK’s future infrastructure and cities.”
Shares in Legal & General fell 4 per cent in early trading on Wednesday.