L&G cuts dividends to conserve cash
Insurer Legal & General has revealed a £351 million drop in investments in the six months to June 30 forcing it to make another cut to its dividend payouts.
The news of its "negative investment variances", which left operating losses on an IFRS basis down by 92% to £31 million, caused shares to fall across the sector, with L&G shares dropping by around 8%.
L&G, which is the UK's third largest insurer, has cut its interim dividend payout by 45% in an attempt to increase cash balances to stabilise the business.
Despite the news of the dividend reduction, L&G performed better using the more closely watched European embedded value (EEV), which are used to estimate the present value of future profits in the insurance industry, showing a 12% rise to £657 million.
The insurer also said the savings business had started to "turn the corner", with its capital buffer improving by £300 million since the end of March.
Insurance analyst at Panmure Gordon, Barrie Cornes, said that although L&G had been forced to make dividend cuts the results are "solid".