The Lemon Fool

Reinsurance will often be in tranches so they don't lay off the whole risk but just the risk above a level they are comfortable with and then tranches of excess over that. It tends to all get well spread around the global market

Reassure, subject to Court approval, is only buying their Mature businesses, not the entire life insurance book. The traditional with profits policies and the like.

In some ways it seems surprising that L & G would reinsure most of their mortality risk but clearly they feel that is a good way to manage the risk.

Dod

https://www.investegate.co.uk/legal---g ... 06530985Q/

Balance sheet strength

Legal & General's balance sheet is strong and the solvency ratio is robust. We expect our shareholder solvency ratio at half year to be in a range of 162% to 167% and a surplus over the Solvency Capital Requirement (SCR) of circa £6 billion. These estimates do not include the proposed RT1 debt issuance, and assume unchanged market conditions to the end of June.

Our £76.9 billion annuity portfolio1 continues to outperform markets on downgrades and defaults due to thoughtful asset allocation and active asset management. For example, we have limited exposure to airlines, hotel, leisure and traditional retail which together represent less than 2% of our portfolio2.

Downgrades within investment grade have minimal impact on our solvency ratio. Our defensive positioning has meant that we have outperformed the downgrade experience of the market, with just 0.65% of our traded credit portfolio (excluding gilts) downgraded to sub-investment grade.3 While we have had no defaults year to date, our balance sheet remains underpinned by a credit default reserve of £3.2 billion2. The annuity portfolio's direct investments continue to perform strongly, with 99% of scheduled cash-flows paid year to date, reflecting the high quality of our counterparty exposure.


Business update

Legal & General remains well placed to deliver strong, attractive growth and returns in our core markets, which are aligned to our six, long-term, structural growth drivers: ageing demographics, globalisation of asset markets, investing in the real economy, welfare reforms, technological innovation and addressing climate change.

Our business continues to perform strongly, broadly in line with prior year.

· Our growing annuity portfolio £76.9bn1, which underpins our Institutional and Retail Retirement businesses, is a resilient source of profits and capital generation. In respect of new business:

o LGRI (our Institutional Retirement business) has transacted £2.8 billion of global Pension Risk Transfer (PRT) across 25 transactions to 5 June, and we expect a further £0.6 billion of PRT transactions during June. Additionally, LGRI is actively quoting on a further global PRT pipeline of more than £25 billion.

o LGRR (our Retail Retirement business) delivered £337 million of annuity premiums to the end of May, down 17% year on year, and made £315 million of lifetime mortgage advances over the same period, down 21% on the prior year.

· LGIM (our Investment Management business) achieved external net flows of £11.2 billion to the end of May and total AUM is estimated at £1,233 billion. Over the period, external revenue increased 9% to £385 million.

· LGC (our early-stage investment business) is now beginning to reopen its house-building operations, with enhanced safety procedures. Whilst the market is still returning to normal, we are starting to see more sustained consumer demand for housing of all types and tenures. We continue to secure planning permissions in the UK to meet Later Living and Affordable Housing needs. LGC has made further investments in decarbonisation, with its clean energy investment portfolio now covering low carbon heat, transport and power generation.

· LGI (our insurance business) has achieved £1,240 million of total gross written premiums to the end of May, up 4% on the prior year. We continue to monitor mortality claims closely.



"L&G is performing strongly. Accessing this market opportunity now both strengthens our capacity to deal with post-COVID economic uncertainty and enables us to play a fuller part in the investment-led recovery which will be needed as we emerge from this pandemic."

SlickMongoose wrote:https://www.investegate.co.uk/legal---general-grp/rns/l-g-plans-to-capitalise-on-favourable-market-condi/202006161006530985Q/

Balance sheet strength

Legal & General's balance sheet is strong ...

But all that was part of an announcement that, despite being financially robust enough to pay the dividend against the steer from the BoE, they were going to issue an undisclosed amount of new Tier 1 debt. Borrowing to pay the dividend?

Wizard wrote:

SlickMongoose wrote:https://www.investegate.co.uk/legal---general-grp/rns/l-g-plans-to-capitalise-on-favourable-market-condi/202006161006530985Q/

Balance sheet strength

Legal & General's balance sheet is strong ...

But all that was part of an announcement that, despite being financially robust enough to pay the dividend against the steer from the BoE, they were going to issue an undisclosed amount of new Tier 1 debt. Borrowing to pay the dividend?

This is a constant refrain. Can a dividend paying company never legitimately borrow?

GrahamPlatt wrote:

Wizard wrote:

SlickMongoose wrote:https://www.investegate.co.uk/legal---general-grp/rns/l-g-plans-to-capitalise-on-favourable-market-condi/202006161006530985Q/

Balance sheet strength

Legal & General's balance sheet is strong ...

But all that was part of an announcement that, despite being financially robust enough to pay the dividend against the steer from the BoE, they were going to issue an undisclosed amount of new Tier 1 debt. Borrowing to pay the dividend?

This is a constant refrain. Can a dividend paying company never legitimately borrow?

Yes, of course it can. I merely posed the question because of rather unusual times we find ourselves in.
Borrowing at current rates may prove a very shrewd move. I am interested to see how much they actually borrow.

L&G Half Year Results 2020 Part 1

https://www.investegate.co.uk/legal---3 ... 00031407V/

Part 2

https://www.investegate.co.uk/legal---3 ... 00061425V/

And 3

https://www.investegate.co.uk/legal---3 ... 00091431V/

Thanks again Ian

So this time a held interim dividend with a slight straw in the wind re the future level of dividends, 'providing flexibility'

Be ankful for small mercies.

Dod

Dod101 wrote:Be thankful for small mercies.

Dod

Quite.
Dividends are a bloodbath at the moment. Any that get declared are a bonus.

Legal & General announces new 5 year dividend, cash and capital ambitions.

Here; https://www.investegate.co.uk/legal---3 ... 00050496F/

idpickering wrote:Legal & General announces new 5 year dividend, cash and capital ambitions.

Here; https://www.investegate.co.uk/legal---3 ... 00050496F/

That's about a 12% cash flow yield per year, and around 8% dividend yield.

LG has been creeping up nicely on rails recently.

Stan wrote:LG has been creeping up nicely on rails recently.

Yes but it has said it will keep the Final Dividend 'flat', another word I assume for static. And of course all companies can have 'ambitions' Still, L & G has a decent record so these ambitions are probably not unrealistic.

Dod

L&G has become by far the biggest % of my portfolio. I really need to diversify but struggle to find any other stock whose share price is so stable and offers >6% yield .

MickR wrote:L&G has become by far the biggest % of my portfolio. I really need to diversify but struggle to find any other stock whose share price is so stable and offers >6% yield .

Can we get a definition on stable please?

This is a share that has more than halved in the last year, and subsequently more than doubled!

MickR wrote:L&G has become by far the biggest % of my portfolio. I really need to diversify but struggle to find any other stock whose share price is so stable and offers >6% yield .

Would buying some British American Tobacco be ok with you? They offer a yield of 7.55% currently. I hold both BATS and LGEN in my 25 share HYP.

Ian.

dealtn wrote:

MickR wrote:L&G has become by far the biggest % of my portfolio. I really need to diversify but struggle to find any other stock whose share price is so stable and offers >6% yield .

Can we get a definition on stable please?

This is a share that has more than halved in the last year, and subsequently more than doubled!

Haha I bought in 2011 when the shares were at 100p or so, had a couple of nibbles on the dips in the meantime, then a large bite in April at 180p. Over a 10 year period, they have been fairly stable but, in my mind, have a far more secure future than tobacco and banking stocks. Anyhow, I buy these type of stocks for their dividends and try and ignore the price on a day to day basis. The yield on LGEN has been fantastic, with no sign of it beginning to drop off(apart from a small covid hiccup)

idpickering wrote:

MickR wrote:L&G has become by far the biggest % of my portfolio. I really need to diversify but struggle to find any other stock whose share price is so stable and offers >6% yield .

Would buying some British American Tobacco be ok with you? They offer a yield of 7.55% currently. I hold both BATS and LGEN in my 25 share HYP.

Ian.

thanks Ian

I keep looking, but in all honesty, I believe that there's no future in tobacco. I can only see the share price, and subsequently the dividend falling

Mick

i am a buyer of LGEN -- at 200 or less .