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Legal & General plans to keep spending

Legal & General pledged to continue investing in Britain's recovery today after the insurer spent nearly £3 billion on infrastructure and housing projects during a record year for the group.

Pre-tax profits jumped 10% to £1.13 billion in 2013, boosted by recent acquisitions and a surge in workplace pensions business thanks to the Government's scheme to automatically place employees onto retirement schemes.

It revealed a £12 million hit from the extreme wet weather and recent flooding across parts of the UK, but the bill is far lower than its larger home insurance rivals, such as Direct Line Group, which last week said it was expecting a hit of up to £110 million so far from the storms and floods since the start of the year.

L&G said it received less than 200 claims in January and February.

Chief executive Nigel Wilson said the group continued to trade strongly in the first two months of 2014, but warned over the potential for further impact on the global economy and financial markets as the "monetary methadone" of quantitative easing (QE) programmes are withdrawn.

America's move to start tapering its massive QE drive pumping cash into the economy has already sent shockwaves through emerging markets in recent months.

But L&G said it was "actively seeking" opportunities to invest its share of a £25 billion war chest promised by the insurance industry to spend on infrastructure projects and boost recovery efforts.

Mr Wilson said: "As the largest institutional investor in the UK, we are front and centre in delivering the steady, stable investment in debt, equity and physical infrastructure required for recovery."

It more than doubled spend on direct investments last year to £2.9 billion from £1.4 billion in 2012, putting cash into projects such as the development of the new Royal Liverpool University Hospital as well as buying a 46.5% stake in housebuilder CALA Homes last March.

Annual results revealed the group has been reaping the rewards of the auto-enrolment programme, with workplace pensions assets up 45% to £8.7 billion.

The number of employees enrolling into workplace schemes almost trebled to 903,000 in 2013 and L&G said opt-out rates for auto-enrolment remained low at under 10%.

Auto-enrolment first came into force for larger businesses in October 2012 as part of a phased launch and will apply to smaller firms with between 59 and 499 staff during 2014.

The roll out has also provided a boost to sales of protection insurance, with gross premiums up 5% to £336 million as schemes reviewed their wider employee benefits along with their pension scheme.

Across the group, total worldwide sales rose 18% to £2.5 billion in 2013.

L&G said the results were also helped by a robust market for bulk sales of annuity products to companies, with premiums up 180% to £2.8 billion, which helped offset a "subdued" individual annuity market.

It received a further fillip as net investment inflows hit £17 billion, with nearly half from the Cofunds platform it bought last March.

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