Sir Nigel Wilson, the former chief executive of Legal & General, has called for more UK investment in order to help early-stage companies compete with their western counterparts. He made this call as he announced his final results.
Wilson, who will step down from his position as FTSE 100’s insurer in January, after leading it for more than a decade, stated that Britain needs an “investment led growth strategy”, which includes planning reform. It also calls for a response to the recent US legislation, which has supported domestic industry.
Wilson stated that “we’ve been underinvesting in comparison to our peer group and we should reverse this.” Wilson said: “We have always believed that the UK was a good place to invest. . . He cited the UK creative arts sector, as an example.
Wilson compared Britain with the US which, last year, introduced the 280bn Chips and Science Act in order to support the semiconductor sector, and subsidises clean energy via the Inflation Reduction Act.
He argued that moves to allow British pension funds invest in a broader range of assets including start-ups must be met with a “backdrop” which allows people to invest into modernising the UK’s economy.
Wilson stated that the UK “missed out” on most of the tech boom after 2000, but there were some promising start ups. I’d like to see in 10 years that scale-ups have become a significant part of the FTSE 100.
L&G reported operating profits of £941mn in the first half of its financial year, a 2 percent decline from last year, but still exceeding analyst consensus expectations of £834mn. This was due to a robust market for individual and bulk annuities.
The group has completed £4.9bn in UK corporate pension deals. Companies pay a premium for the offloading of their pension liabilities. L&G completed £1.8bn in the second half and has agreed similar amounts of deals with the US since June.
Analysts stated that the company put up less capital than anticipated for these deals. L&G stated that it had the potential to write off up to £11bn in UK bulk annuity volumes, and the UK annuity book could be self-sustaining once again by 2023.
The rising interest rates in the United States have helped to increase the funding of pension funds and many are now in a better position to negotiate with insurers.
The regulator has asked insurers to be cautious in the amount of new business they accept.
Wilson said that there is enough business for everyone. He added that the biggest pension funds will likely get “chopped” up and make deals in phases. Wilson cited its recent four-part agreement to absorb the British Steel Pension Scheme.
L&G’s retail business has also been “bolstered by” the increase in individual annuity purchases. L&G’s fund-management arm was weakened by rising rates, causing its assets to drop from £1.29tn (in June 2022) to £1.16tn. Wilson stated that the business was “stabilised”, and that it saw “green shoots” of sales in products like exchange traded funds and Multi-Asset Funds.
The insurer’s UK protection business fared worse, with premiums for new business falling from £85mn per year to £76mn annually in a market it called “increasingly crowded”.
Just Group (the FTSE 250-listed life insurer) said that it is “highly confident” of exceeding its operating profit target for the full year due to a booming market in individual and bulk annuity purchases, both boosted higher interest rates.
Just Group shares rose by 1% in the late morning trading while L&G fell 3% amid a general decline in UK blue chip stocks.
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