Legal And General

[robertbanking]

Hello you wonderful and intelligent people that make up this forum. I truly hope you are having a nice week and doing well.

I was kindly interested in the stock Legal and General LON: LGEN i have done alot of research into the company, its competitors, the industry and wider economics. I know Legal and General is one of the UKs largest retirement and protective solutions. In January 2024 Antonio Simoes will be the new CEO who has a banking background working previously at Banco Santander. The stock seemed to take a hit in 2022 due to its assets not performing as well due to the widespread inflationary pressures. However the predictions for 2023 and 2024 revenue predictions are looking promising. I kindly wondered if anyone please had any thoughts on this company, anything to consider or anything i may have overlooked please? If anyone could reply, i would be forever grateful and very thankful for your time and support.

Sending you lots of good wishes and i truly hope your success investing continues. Take care.

[monabri]

LGEN is a popular share on the HYP boards and is this discussed a lot...here's the link


viewtopic.php?p=205798#p205798


There are many pages so perhaps skip to the last page and decide how much you wish to go back.

Link to comments on the recent final results

viewtopic.php?p=573801#p573801

[Gerry557]

I can't really comment on your personal choices.

I have started to build a position in LGEN myself and added more this week.

Obviously I decided it was worth investing some of my dosh and a bit of time. Yes things look OK now.

I think the biggest threat is the market in general. Should ression hit hard and interest rates keep rising, a falling market is quite likely. In that event all boats get dragged down.

Will you be happy to take that risk and ride it out?

For me it's an income share in which the dividends might get reinvested should the SP fall

[Hornblower]

I haven't researched L&G, so this is just thinking out loud, but could they be exposed to the collapse in gilt prices due to the increase (normalisation) of BoE interest rates?

As I say,I've not looked into this, nor have I experience working in The City....but perhaps there are horrors on their books where their assets Vs liabilities have been completely clobbered?

For example, I buy an annuity off them for £100k. They agree to pay me £5K a year that rises with inflation. They take a large chunk of the £100k & are legally obliged to buy gilts. Now rates rise, gilts drop in value & their asset base is down 40%. They technically no longer have enough assets to meet their obligations.

Is this why their divi yield is 8.36%/ & P/E is 6.2, because the market believes that this is not sustainable & divis will need to be cut to shore up the balance sheet?


Hornblower

[Smoggy]

They'll be hedging their liabilities by holding gilts and bonds of similar duration to your annuity. Their balance sheet shows the present value of liabilities using a discount rate linked to gilt yields. So when interest rates increase and the value of the gilts they're holding decreases, the liability value associated with your annuity will decrease by a similar amount and it should all balance out.