PENSIONS giant Legal & General (L&G), which is investing heavily in the housing market in Scotland, has said it is on track to achieve its growth ambitions in spite of the challenges posed by the coronavirus crisis.
The company broadly maintained operating profits in the latest year in a performance it said showed the robustness of its model, although Covid-19 related events reduced earnings by £228million.
Under this model, L&G has been growing its presence in the housebuilding market in the UK, in which it expects to generate good returns on investment.
The company, which has headquarters in London, became a significant player in Scotland through the acquisition of Cala in 2018 in a £605m deal.
Legal & General noted yesterday that it was impacted by a pause in traditional house-building and sales activities amid lockdown restrictions last year. However, the company said it has benefited during the current year from a continuation of the rebound in the UK residential property market. This has also increased demand for the protection products it sells.
While the outlook for the broader economy remains uncertain, L&G remains confident that it will be able to deliver resilient, organic growth through periods of macro-volatility, supported by a “strong competitive positioning in attractive and growing markets”. These include housing in the UK.
The company said: “The long term need for UK housing is well established: each year delivery of new homes falls short of demand, leading to increased levels of overcrowding, affordability issues, impaired labour mobility and increased levels of homelessness.”
Legal & General sells new homes through Cala and also invests in rental property and in housing for older people.
READ MORE: Developer in talks about landmark Edinburgh deal amid hopes of recovery
In September the company agreed to invest £81.5m in a 17-story tower rental development featuring 346 homes that will be built in Glasgow’s Candleriggs Square, on the site of the former Goldberg’s department store.
In December it submitted plans for a £50 million hub featuring a hotel and rooftop bar on the site of a Debenhams store on Edinburgh’s Princes Street to the city council.
The company yesterday said it was positioned to achieve its long-term targets of delivering over 3,000 traditional build to sell homes per annum, the 5,500 build to rent homes in its pipeline and 3,000 affordable homes per year by 2023.
It said key growth drivers included the fact growing numbers of people are living for longer, meaning their pensions need to last longer too. This is increasing demand for pensions products and related services ,from companies and individuals. The company’s retirement businesses grew operating profits by 10 per cent last year, to £1.554bn from £1.414bn.
Legal & General also highlighted the importance of the globalisation of asset markets. It said North America, Europe and Asia Pacific all presented attractive growth opportunities for its investment management arm.
This grew assets under management by seven per cent annually in 2020, to £1,279 billion. It benefited from £20.4bn of external funds inflows net of withdrawals.
Rivals of L&G’s based in Scotland have followed different strategies.
The group created in 2017 through the merger of the Standard Life pensions business and Aberdeen Asset Management decided to focus on investment management. Standard Life Aberdeen sold its pension business to Phoenix in 2018 for £3.2bn. Last month it agreed to sell the Standard Life Brand to Phoenix, for which it manages £147bn funds. SLA has a 14% stake in Phoenix.
READ MORE: New owner underlines value of venerable Standard Life brand sold by Scottish giant
On Tuesday SLA revealed that total funds under management and administration at the firm fell to £534.6bn in 2020, from £544.6bn. It cut its full-year dividend payout to 14.6p per share, from 21.6p.
L&G held its full-year dividend at 17.57p. It made £2.22bn operating profit in 2010, against £2.29bn last time.
Lloyds Banking Group-owned Scottish Widows sold its investment management business to Aberdeen Asset Management in 2013
Phoenix grew operating profits to £1.2bn in 2020, from £0.8bn, helped by the £3.2bn acquisition of Reassure, a closed pension book specialist, from Swiss Re.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here