L&G reports 2017 operating profit of £2.0bn with record PRT volumes
Legal & General reported a 32% increase in operating profit to £2,055m in 2017, supported by record pension risk transfer activity and a substantial mortality reserve release. The result fed through to a 32% rise in profit before tax to £2,090m and a 50% increase in profit after tax to £1,902m, alongside a higher full-year dividend.
Nigel Wilson, group chief executive, said Legal & General delivered a record £2.1bn operating profit in 2017, citing strategic focus, alignment to global growth drivers and execution. Legal & General reported that it ended the year with operating profit increasing 32% to £2,055m, including £332m in mortality reserve releases, while operating profit from continuing operations excluding mortality releases increased 12%. Within Legal & General Retirement (LGR), operating profit increased 54% to £1,247m, and was up 13% when the mortality release is excluded.
Business line performance and cash generation
LGR operating profit rose from £809m to £1,247m, an increase of 54%, reflecting both underlying growth and the mortality reserve release. Legal & General stated that LGR operating profit was up 13% when the £332m mortality release is excluded, pointing to growth in its core retirement franchise. The group described this as part of a record operating profit outcome, with retirement a major contributor to the overall £2,055m figure.
In protection, Legal & General Insurance (LGI) gross premiums increased 5% to £2.5bn compared with £2.4bn in the prior year. The company reported that this premium growth formed part of the broader 12% increase in operating profit from continuing operations excluding mortality releases. Across the group, profit before tax rose 32% to £2,090m and profit after tax rose 50% to £1,902m, capturing the combined impact of business line growth and reserve actions.
Legal & General reported that it ended the year with over £3.4bn of cash, stating it was well placed to grow further in 2018. The group increased its full-year dividend by 7% to 15.35p per share, up from 14.35p, aligning distributions with the higher profit and cash position. Management said the record operating profit and strong cash generation supported both the dividend uplift and future growth ambitions.
The group linked the mortality reserve release directly to the longevity trend review completed in H2, positioning it as a discrete capital and reserving action within the 2017 results. Legal & General stated that it entered 2018 with over £3.4bn of cash and a higher dividend base, following a year of record operating profit and material reserve actions. The next phase of delivery will depend on how underlying 12–13% operating profit growth, excluding mortality releases, translates into future cash generation and capital deployment.
--- Sources: https://www.legalandgeneral.com https://group.legalandgeneral.com/media/41qd0xjb/2017-full-year-results.pdf https://www.ig.com/en-ch/news-and-trade-ideas/shares-news/insurers-round-up--aviva--prudential-and-legal---general-180316
