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Commercial banks

Legal & General Sees Strong Growth Despite NatWest Deal Fallout

Strategic Insights

— 1 min read

Legal & General, the insurer still grappling with the aftermath of the collapse of its £10.7 billion takeover bid by NatWest, has reported robust growth in its core individual life and pensions market in the UK. The firm's new business figures for the third quarter show a significant increase in new equivalent premium income (EPI), a key measure of insurer performance. This growth is largely driven by the company's successful sales of personal pensions, which have increased by over 10% and outpaced those of its competitors. However, the market for group personal pensions has been impacted by the uncertainty surrounding the government's plans to introduce stakeholder pensions.

Key Takeaways:

  • Legal & General's core individual life and pensions market saw a 33.4% increase in new equivalent premium income (EPI) to £93.8 million in the third quarter.
  • Personal pension sales increased by over 10%, significantly outpacing other insurers, with the company well-positioned to capitalize on the government's launch of low-cost stakeholder pensions.
  • Total UK life and pension sales measured by EPI rose 26% to £135.1 million, held back by a 25% fall in group life and pensions sales to small and medium-sized employers.
  • The company is still facing challenges in the group personal pensions market due to uncertainty surrounding the government's plans to introduce stakeholder pensions.
  • David Prosser, Legal & General's chief executive, expressed disappointment at the collapse of the NatWest deal, stating that the company had believed it could create value for both NatWest and L&G, as well as provide a better service to customers.
  • L&G shares have fallen nearly 40p since NatWest's initial bid, but analysts still consider the company to be in play.

Statistics:

  • New equivalent premium income (EPI) : £93.8 million (33.4% increase)
  • Increase in personal pension sales: 10%
  • Total UK life and pension sales measured by EPI: £135.1 million (26% increase)
  • Group life and pensions sales to small and medium-sized employers: £16.1 million (25% decrease)
  • L&G share price: 163p (fall of nearly 40p since NatWest's initial bid)

Sources:

  • "L&G's new premium bonanza" by The Times, published September 30, 1999, pages Tempus, 32.

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