Legal & General (L&G) has reported a pre-tax profit of £1.24bn in 2014, as its investment arm saw a decrease in net flows.
L&G Investment Management (LGIM) reported revenue of £645m in 2014, up 9% on the £594m it made in 2013, with total assets under management increasing from £449.5bn to £499.1bn. However, total net flows for 2014 came to £7.6bn, a fall of 63% on 2013 (£20.3bn).
The insurer had larger than expected outflows from its index funds, L&G CEO Nigel Wilson said on a conference call.
LGIM said that it had seen strong demand in liability driven investment (LDI), multi asset, active fixed income and property asset classes, coupled with positive market returns.
The group has a total asset portfolio of £57.2bn. Of this, £45.8bn is in bonds (sovereigns, banks and other bonds), £2bn is in property, £2.3bn in equities, £4bn in derivatives and £3bn in bonds. It also has a further £0.1bn in other assets.
Looking ahead the company said that the clear intention of the majority of companies to de-risk their defined benefit pension schemes is expected to result in strong LDI new business volumes in the UK and US in 2015. It added: "This growth is expected, in part, to offset outflows in our UK passive funds which results from this de-risking trend and pension schemes using funds to pay annuitants."
LGIM added that following the success of LDI in the UK it is concentrating on expanding its presence in the US market, where it is expanding its distribution capabilities and widening its product offering across LDI, active fixed income and index products, with passive funds opening to third party investment in 2015.
At the same time as announcing its results, L&G said Robert Moore had been appointed as CEO of LGIM's US affiliate, Legal & General Investment Management America (LGIMA).
Moore, formerly president of LPL Financial, will take up his new role in early April and will be based in Chicago, reporting to Mark Zinkula, CEO of LGIM.
LGIMA manages institutional assets of £85.3bn, part of LGIM's worldwide total assets of £708.5bn, as at 31 December 2014.
Channels:SAA/ALM
People:Nigel Wilson