L&G reports rise in SCR and liquidity remains strong

Written by Adam Cadle

05/10/2022

L&G’s solvency coverage ratio (SCR) is estimated to be between 235-240% as at 30 September 2022, the insurer has said, up at least 23 percentage points from HY 2022 (212%).

The group said this principally reflects the contribution from higher interest rates and strong ongoing operational surplus generation.

Group liquidity remains strong with c.£2.3bn of available cash across the Treasury and the LGC Traded portfolio and is in addition to the large amount of cash and gilts held by the annuity portfolio.

On the annuity side, L&G said annuity portfolio continues to perform well and demand for global PRT is accelerating. “Despite volatile markets, the group’s annuity portfolio has not experienced any difficulty in meeting collateral calls and we have not been forced sellers of gilts or bonds,” it said.

Demand for global PRT continues to increase, with funding deficits reducing because of rising interest rates and widening credit spreads. Legal & General Retirement Institutional (LGRI) has transacted or is in exclusive negotiations with a further £1.3bn of PRT since H1, including two transactions signed last week, taking the total written year to date to £5.8bn.

L&G said it expects to deliver FY operating profit growth in line with the growth delivered in H1 (8%) and FY capital generation of £1.8bn.

Group CEO Nigel Wilson said: “We continue to work closely with our customers to support them through this period of increased market volatility.”

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