L&G plans to issue restricted tier 1 debt to 'capitalise on favourable market conditions'

Written by Adam Cadle

16/06/2020

Legal & General is planning to issue restricted tier 1 debt in order to "capitalise on favourable market conditions", it stated today.

The insurer expects the 11.25-year contingent convertible restricted Tier 1 notes to be rated Baa3 by Moody's and BBB by S&P.

"Our decision to issue RT1 debt is motivated by favourable bond market conditions and serves as a further measure of prudence, since the longer-term economic impact of COVID-19 remains uncertain," the insurer stated. "This debt issuance also positions us strongly for the recovery phase from COVID-19, continuing our established inclusive capitalism strategy."

The company said its solvency position is "robust" and its operational performance is "resilient".

"Our asset portfolio continues to perform well in absolute and relative terms, in light of the economic impact of COVID-19," it added.

The company expects its shareholder solvency ratio at its half-year to be between 162% and 167%, with a surplus over the solvency capital requirement of about £6bn. At the end of 2019, L&G's Solvency II coverage ratio stood at 184%.

L&G said its GBP76.9 billion annuity portfolio "continues to outperform markets on downgrades and defaults due to thoughtful asset allocation and active asset management".

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