Legal & General has suffered a further reduction in assets under management in the first half of 2023 as operating profit fell.
The Legal & General Investment Management unit suffered the biggest fall in operating profit on a percentage basis with profits falling 29% to £142m. Their retail business suffered a 22% drop in operating profit.
Legal & General was a victim of the mini-budget debacle last year and there have been questions about the health of the business ever since.
Group assets under management were around 10% in the half year to 30th June with Legal & General Investment Management AuM falling to £1.15bn from £1.29bn.
Despite the poor performance, Legal & General increased their dividend by 5%. The company now yields in the region of 8%.
Legal & General shares were down 4% at the time of writing.
“Life insurer Legal & General may be on track from its own perspective as it beat expectations but the reaction of the market suggests investors aren’t fully on board. The company is one of the biggest investors in the UK stock market and what may be creating disquiet is the material drop in assets under management,” said AJ Bell investment director Russ Mould.
“This is a result of both market conditions but also net outflows. As a domestic facing stock Legal & General could also be vulnerable thanks to the latest wage growth data suggesting inflation is becoming more entrenched.
“Rising interest rates are a double-edged sword for Legal & General. Higher rates have led to an improvement in the funding situation of final salary pension schemes and this has enabled them to offload their pension risk to insurers like Legal & General through what is known as a bulk annuity agreement more readily. This is helping to generate growth in this part of Legal & General’s business.”