Legal & General Group PLC (LON:LGEN) has unveiled a new plan to grow its dividends at “low to mid-single digits” for the next five years but reiterated that its current intention is to keep the final 2020 payout flat on 2019
For the period until 2024, the FTSE 100 life insurer said its “ambition” is to generate a total of £8bn to £9bn of cash and capital and to pay £5.6bn-£5.9bn of this as dividends.
The aim is also to grow earnings per share faster than dividends, with net surplus generation to exceed dividends.
L&G chief executive Nigel Wilson said this would deliver an “attractive combination of income and growth”.
This is expected to come from across the group, with each of L&G’s five businesses having “distinct competitive advantages” and operating in markets that are “large and growing”.
The life and annuity business provides stable cash flows from growing back-books, with the annuity portfolio expected to be fully self-financing in the next three to five years.
The Investment Management arm, LGIM, and origination business, LGC, are seen operating in attractive and profitable markets, with both having a strong commitment to ESG-aligned investing.
The group’s general insurance arm LGI aims to sustain growth in the UK and expand in the US and adjacent markets by “applying technology best practice”.
For the current year, L&G said its ambition remained to generate operating profit broadly in line with 2019’s £2.3bn, with the group’s solvency ratio currently “in the mid-170” in percentage terms, up from 173% in the first half, with the annuity asset portfolio having experienced no bond defaults, with 0.8% of net downgrades.