L&G beats forecasts with profit rise

By Clara Ferreira-Marques

LONDON (Reuters) - Legal & General topped forecasts with a 6 percent rise in first-half operating profit on Tuesday, as annuity sales more than offset the impact of a weakening economy and turbulent markets.

Analysts had expected flat profits or a slight dip for the most UK-focused of the country's major insurers, and news of the results boosted L&G's shares more than 7 percent.

L&G said its interim operating profit, on a European embedded value (EEV) basis, was 626 million pounds, above an average forecast of 587 million pounds, according to a Reuters poll and at the top end of estimates.

Statutory operating profit ticked 1 percent higher.

The insurer also confirmed it was pressing ahead with a 1 billion pound share buyback programme, due to complete later this year, and confirmed its 7.5 percent dividend growth rate.

At 9:24 a.m., L&G shares were up 6.4 percent at 102.8 pence, one of the top gainers in the FTSE. So far this year, L&G has seen its shares fall more than 20 percent, broadly in line with the wider sector.

"It's a beat across all numbers and a good performance," said analyst Raghu Hariharan at Fox-Pitt, Kelton.

New business profit for the insurer grew 8 percent to 806 million pounds on stable margins, boosted by continued strength in pension buyouts, a distribution deal with building society Nationwide and a stable overall result for its protection business, despite the effect of a weakening housing market.