Compared with competitor Standard Life, which continued to see outflows from its investment arm, Legal & General Investment Management (LGIM) announced what the firm touted as “a strong set of financial results” for the first six months of 2017.
Assets under management (AUM) climbed 13% to £951.1bn, helped by external net flows of £21.7bn, a jump from the £9.6bn of inflows it attracted over H1 2016.
The life insurer’s asset management arm also enjoyed higher profits of £194m, compared with last year’s £171m.
The group as a whole took in 41% higher profit before tax of £1.2bn, including a £126m boost from a recent tapering of the long term trend of improved life expectancy.
While the deviation in the latest British mortality statistics is good news for insurance companies generally, it prompted speculation from analysts that L&G’s earnings were inflated, sending its shares down 2.2% at £2.70 per share by mid-morning.
Despite analysts’ reservations, the insurer’s investment management arm saw positive growth across nearly all of its channels.
LGIM’s growth in international markets was particularly strong, resulting in record net inflows of £17.9bn, up from £6.7bn in 2016.
Total AUM for its international business soared 31% to £198.3bn from £151.9bn the year prior.
Of its international hubs, the US garnered the most business, delivering £8.6bn in net flows across its Solutions brand, which includes its multi-asset strategies, Action Fixed Income and Index funds.
Net inflows in Europe (£6.6bn) and the Gulf region (£2.5bn) were also higher over the first half of the year, but its Asia business only brought in £300m versus £500m the year before.
Although there were “a number of potentially destabilising events” in the first half of the year, like the UK’s snap election and the start of Brexit negotiations, the life insurer claimed the opportunities in the UK and US remain largely unchanged.
By focusing on its six established long term growth drivers, among them ageing demographics, globalisation of asset markets and technological innovation, the group said over 2016 and 2020 it plans to match the profit growth it saw in 2011 and 2015, where earnings per share grew 10% per year.
Similarly, LGIM CEO Mark Zinkula said the asset management unit’s “increasing momentum” was looking set to continue.
“We once again experienced positive asset flows across almost all channels, regions and investment areas in the first six months of 2017, which illustrates the breadth of LGIM’s business model,” he said.
“In addition to being the largest manager of DB and DC assets in the UK, our retail business continues to gain market share, ranking first in net sales during the second quarter. We are experiencing increasing momentum in all of our target international markets, with record net flows from international clients.
“Looking to the future, we will continue to use our scale and influence as an investor to bring about positive change in the companies and markets in which we invest.”
The company announced it had increased its dividend by 8% to 4.3p per share.
