Legal & General is back to health with a hike in dividend
In 2009 as solvency fears mounted and investors worried that insurers were going the way of the now nationalised banks, Legal & General shares plummeted below 25p at one point.
Today they were off 1.6p at 108.1p, leaving the company valued at a hefty £6 billion after it unveiled a tasty 25% rise in its half-year dividend.
That increase to 1.66p a share might be seen as vindication for Tim Breedon, the chief executive who led the company through the storm, always insisting that City fears about the health of the business were somewhere between misplaced and ridiculous.
Sales in the last six months are up 4% to £920 million, though profits fell by £100 million to £537 million.
That seems to be a reflection of the cost of writing new business and a higher number of life insurance payouts.
Said Breedon: "We remain confident in our business model and strategy. Our leading market positions in UK savings, annuities, protection and asset management are delivering healthy returns for shareholders.
"Sales volumes continue to grow, and we are developing attractive new businesses both in the UK and internationally."
Panmure Gordon analyst Barrie Cornes said: "Despite the share price relative outperformance against the life sector in 2011 the share price is too low in our view. We believe that L&G is much more investable than it has been for many years."
