Reports
LGIM Reports 11 Per Cent Profit Growth In Spite Of £16 Billion Index Net Outflow
UK-based Legal & General Investment Management recorded a £32 million climb in operating profit over 2014.
Operating profit at Legal & General's investment management arm rose 11 per cent to £336 million (around $515 million) over the course of 2014, according to the UK firm's full-year results statement.
Legal & General Investment Management recorded £645 million in revenue for 2014, up 9 per cent from the previous year. It was a busy year for LGIM in the US, with the acquisition of Georgia-based Global Index Advisors and the transferral of around $60 billion of US index equity funds to the Chicago office. By the end of the year, the US contributed net flows of $9.7 billion and international assets soared 110 per cent to £128.8 billion.
Total net asset flows, however, plunged 63 per cent to £7.6 billion, of which international net inflows almost halved year-on-year, from £15.8 billion to £8.5 billion, while net outflows from the company's index funds reached £16 billion. In spite on this, LGIM boosted total assets by 16 per cent to £708.1 billion in 2014.
The asset manager recorded £16 billion in net outflows for the year, which was largely due to the “de-risking trend impacting DB passive funds”, the group said. It linked this shift away from passive funds to the stronger demand enjoyed by liabilty-driven investment and active funds. The group said LGIM holds an estimated 44 per cent of the domestic LDI market.
Legal & General as a whole reported a 10 per cent climb in operating profit to £1.28 billion and an in tandem 10 per cent rise in earnings per share to 16.7p.
Bulk annuity sales at Legal & General Retirement more than doubled to £6 billion as individual annuity sales plummeted by £700 million ahead of next month's British pension reforms, which will give pensioners greater freedom in managing their pots.
“The rapid growth of LGIM’s international business to over £100 billion, the £5 billion of investment in physical assets in the UK, and our entrance into the lifetime mortgage market are all examples of the successful execution of our strategy,” said Legal & General's group chief executive, Nigel Wilson, in the statement.
