Insurer L&G looks for new investments as sales beat forecasts

LONDON Thu May 2, 2013 5:54am EDT

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LONDON May 2 (Reuters) - British life insurer Legal & General outpaced expectations on sales and cash generation in the first quarter of 2012 as its products were snapped up investors and ageing savers putting more aside for retirement.

The firm said in a trading statement on Thursday total sales for the group were up nearly a third from a year earlier to 555 million pounds during the three months to March 31, well ahead of market forecasts of 499 million pounds.

Net cash generation rose by a fifth to 249 million pounds, also ahead of a 244 million pounds forecast, as L&G's businesses gained scale globally.

Management said the firm wants to invest in more expansion in foreign markets, seeking to harness trends such as ageing populations, the retreat of governments from pension provision and a more internationalised investment industry.

The quarter saw L&G make two merger deals: buying out the 75 percent of investment fund supermarket Cofunds it did not already own, and the acquisition of a 46.5 percent stake in UK housebuilder Cala Group from Lloyds Banking Group.

The firm is on the look out for more such transactions, Chief Executive Nigel Wilson said in a conference call with journalists, though he stressed any deals will be bolt on, rather than transformational.

"We have successfully executed two M&A deals and we have the capital, the capability and the appetite to do more to enhance growth," he said.

Wilson said the company is also looking to make direct infrastructure investments in the UK, providing capital at a time when banks are retrenching in the wake of the financial crisis.

Infrastructure has become popular with institutional and individual investors because it can provide steady income streams from sources such as road tolls and inflation-indexed contract revenues.

Investing in infrastructure is also increasingly encouraged by governments seeking to boost private sector financing as they struggle to cut spending and limit public debt.

Wilson said the company was "engaging positively" with authorities over its interest in putting money directly into areas such as housebuilding, urban regeneration, and energy.

"There's a lot of required infrastructure assets in the UK we'd be delighted to increase our investment in," Wilson said.

Among its strongest performing units, the savings business saw a 20 percent jump in sales to 366 million pounds with assets under administration reaching 74 billion pounds, the company said.

The firm's investment management arm saw net inflows of new money more than double from a year earlier to 5.5 billion pounds during the quarter, taking assets under management to 441 billion pounds.

Much of the new money came from international clients in the United States, Gulf and Europe, the company said.

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