One of the UK’s biggest insurers Legal and General (LSE: LGEN) (NASDAQOTH: LGGNY.US) today reported a 10% rise in profits for 2013 as well as better-than-expected net cash generation.
While the dividend was hiked 22% on cash flow and profit gains, the market might have expected a larger increase and the shares fell by 2% to 235p in early trade.
Profit jumped to £1.1bn from £1bn a year earlier due to strong revenue growth and cost control. Net cash generation increased to £1bn from £865m the year before — the group notes that this is triple the figure since the financial crisis.
So far in 2014 Legal & General claims to have performed “strongly” while acknowledging broader risks to the economy and markets remain.
Last month the firm acquired the US investment adviser GIA for $50m with international inflows expected to gather pace in 2014.
The chief executive, Nigel Wilson, commented:
“We have delivered significant outperformance during lean economic times and are building momentum as the economy recovers. We now have over 10 million customers who we provide with good quality, good value products and excellent service, including through the recent floods.”
Earnings per share increased 10% to 15p while the dividend increased by a fifth to 9p per share. Therefore, after this morning’s price movement, Legal & General shares may trade on a P/E of 16 with a dividend yield equaling 3.8%.
Whether those ratings have any impact on your decision to ‘buy’ is up to you.
> Mark does not own shares in Legal & General.