Chicken Lips
07 Dec 2017
Re: Topped up on a few more Me too with my four year old daughter, who knows blues is good red is bad daddy. Hopefully a good lesson as the SP dipped below our purchase price, early doors this morning. I explained, her response - that's a bit mean.
Chicken Lips
07 Dec 2017
Re: Pleasantly Confused I can only think too uk and too much exposed to Brexit. I read something similar for Whitbread where reviews of even recent SP rises suggest do not fully value the total of the company, and its parts because of expressed concerns about being too uk centred. I think this will surpress a number of UK biased firms, as we continue to make a Horlix of leaving the EU - crash out of the EU.I too am now very confused by the myriad of business opportunities in LG. Perhaps this is also too much a mirror of recent financial woes.
hairyhelmet
07 Dec 2017
Pleasantly Confused I feel a little confused why the PE is low and the price hasn`t shot up after an excellent update. I have held LGEN for a long time now and although its business is complex and I don`t understand all the numbers, I am more than happy to hold. At face value its seems a no brainer because its growth is steady, dividend secure and the future looks bright. I wish I could find more stocks like this.
Hydrogen Economy
07 Dec 2017
Re: Update Update looks very positive. I hold significant L&G, PRU and SLA with a few RSA all of which have performed well. I remain optimistic for LGEN and PRU in particular, PRU for the Asian exposure and LGEN for its strong position in UK Pensions which are benefiting from the recent rules change. Not risk free, but LGEN are well placed to manage that. The other businesses also look to be performing well apart from the hicup of excessive claims on UK motor policies, now I think under control. L&G Capital looks to be making some interesting investments in areas like “later living business” (retirement housing) which should be growing demand and profitable if they can manage it correctly.The yield forecast at 5.8% covered 1.7 times, PE just over 10 with EPS growth over 10% last few years, 2018 os forecast to dip slightly before continuing to grow, dividend growth forecast to continue around 5%. The valuation of the dividend stream justifies SP, any SP rise is bonus. I hold a fair chunk but will be looking to add in any weaknessH2
tejo
07 Dec 2017
Update It is hard to imagine a more upbeat trading update than the one issued by LGEN this morning. A very sound business, a good and growing yield and with more growth in sight it is a very attractive investment and have bought more.
IOMINVESTCOM
07 Dec 2017
Topped up on a few more atb
IOMINVESTCOM
07 Dec 2017
Legal & General makes ‘smartÂ’ sale of savings arm Legal & General makes ‘smart’ sale of savings armThe disposal of its ‘mature savings business’ is a smart and opportunistic move from Legal & General (LGEN), says Shore Capital.Analyst Eamonn Flanagan reiterated his ‘buy’ recommendation on the stock after L&G announced the disposal of the mature savings business to ReAssure, an arm of Swiss Re, for £650 million.The division has been mostly closed to new business and has around one million customers holding pensions, savings and investment products totalling £33 billion.‘This disposal by L&G is consistent with the group’s emphasis on rationalising its operations, modernising its products and focusing on its key markets…We view this deal as smart, opportunistic, and entirely consistent with the group’s strategy.’The shares fell 2.3p to 261.7p yesterday.[link]
Chicken Lips
06 Dec 2017
The Times Legal & General has sold 1.1 million life insurance policies to a Swiss reinsurer in a deal that values the business at £650 million.The British insurer said that it had reached an agreement with Swiss Re to sell its mature savings business, which consists of a mixture of its traditional insurance-based pensions, savings and investment products with total assets of £33 billion.Nigel Wilson, chief executive of Legal & General, said that the insurer had taken a “difficult decision” to sell the business, which it hopes will allow the company to concentrate on its remaining investment operations.“Selling mature savings is the right decision for us. It will drive further earnings growth by allowing us to focus on our successful market-leading businesses and to accelerate the scaling up of our growth businesses,” he said.Mr Wilson wants to specialise Legal & General’s business in three areas: investing and annuities; investment management; and general insurance. The mature savings business had been largely closed to new business as part of this plan to redirect efforts towards the operations seen as most important to the company’s future.For Swiss Re the purchase of the 1.1 million policies from Legal & General by its Reassure subsidiary continues its strategy of buying up old UK closed life books from insurers wanting to exit the business.In October the Japanese insurance group MS&AD bought a minority stake in Reassure with an £800 million investment that increased the business’s financial firepower, giving it more resources to pursue its UK closed life book consolidation strategy, which benefits from greater scale.Two years ago Swiss Re bought Guardian Financial Services for £1.6 billion from its private equity owner Cinven. That deal took the insurer’s book to more than four million policies. With the Legal & General mature savings deal the company will service a portfolio of more than five million British savers’ policies.Matt Cuhls, chief executive of Reassure, said that the Legal & General acquisition would continue to bolster the business’s economies of scale from managing a larger pool of assets.“The UK closed book market is consolidating, and this deal allows us to do what we do best: integration, migration and the delivery of great customer services,” said Mr Cuhls.Swiss Re is paying cash for the business and will assume the economic interest in the portfolio from the start of next month. However, the formal transfer of the business from Legal & General is not expected to be completed until the middle of 2019.Legal & General is one of the country’s largest savings institutions and manages assets on behalf of its customers worth about £950 million, putting it among the top tier of global investors.The shares closed 0.9 per cent lower at 261¾p.Seems like the market didn't think much of this.CL[link]
Hydrogen Economy
27 Nov 2017
L&G accelerates housebuilding One wonders if they aren't about 7 years late, piling in just as the housing market risks are getting more acute. Presumably the scale here is such that L&G could ride out a housing downturn with little concern, but not sure the risk reward balance is so attractive. They cite budget changes which I guess gives some support, but if the target of increasing the number of properties built to 300,000 pa (from memory around double what they were a year or two back), is achieved, that is likely to put prices into rapid reverse. Good for the potential buyers and arguably for the country, but not sure shareholders of the developers will see it quite so positively. Also when big companies diversify into very different business sectors it often ends up badly due to lack of understanding of risks and poor cultural fit, hopefully L&G are on top of this.H2[link] new generation of prefab housing is to go up at a 272-acre site near Wokingham after Legal & General said the Budget had given it confidence to invest.The pension giant’s house building arm will accelerate its use of “off-site” construction and begin erecting 1,500 homes at the end of next year. It is L&G’s second major development as it seeks long-term income in the property market.It will build homes for sale and rent, as well as retirement and student properties, many of which will be shipped from its new factory in Leeds. The firm announced last year that it would be investing £55m into the facility, which has the potential to build 3,000 homes a year. It said that using this method and building different types of homes, such as a mix of housing and flats, would reduce the time it would take to complete the development by five years.
Philip Hammond, the Chancellor, said in the Budget last week that the Government would use its purchasing power to drive the adoption of modern methods of construction, including building homes off-site in factories, in order to speed up delivery..............
IOMINVESTCOM
16 Nov 2017
Numis backs Legal & General move into ETFs Numis backs Legal & General move into ETFsLegal & General (LGEN) has made the right decision with its acquisition of passive fund platform Canvas that will allow it to gain footing in the exchange traded funds (ETF) space, says Numis.Analyst Marcus Barnard retained his ‘add’ recommendation and target price of 305p on the stock after the insurer announced it had acquired Canvas from ETF Securities. It also reported its purchase of retirement village Renaissance Villages.‘Canvas will give LGIM a presence in the ETF market, something it missed out on as the low-cost/tracking industry evolved from index funds – where it was strong – towards ETFs,’ he said.‘We believe this looks a sensible way for LGIM to enter the ETF market, with a platform for it to launch ETFs. The acquisition of Renaissance Villages further diversified the range of investments L&G is undertaking to enhance returns.’At the time of writing the stock was trading down 0.8%, or 2p, at 263p.[link]
II Editor
20 Oct 2017
NEW ARTICLE: Five ways to harvest sustainable UK income "Since the financial crisis, investors and savers have seen meagre yields from cash and gilts, with rates anchored at historic lows.For investors accessing markets to extract additional income, it is more important than ever to navigate stretched ..."[link]
Hydrogen Economy
16 Oct 2017
Re: Risk Taking "Any broad crash would hurt the fund valuations and no doubt suppress interest rates so there is clearly some risk"Any broad crash would most likely be caused by RISING interest rates, wouldn't it?That could do the trick, but I could imagine other events could cause a crash, drop growth in China, shadow banking collapse, protectionism or one of the lighted matches Trump keeps throwing at powder kegs finding its mark. I would think that might stop Carney and Co raising rates for a while (not that there is much room to cut them). Crashes seem to happen whilst people are very carefully monitoring the wrong risk.Hopefully we can continue climbing the wall or worry for some time to come, "It'll be a beautiful wall ..." H2
LK Hyman
16 Oct 2017
Re: Risk Taking H2,"Any broad crash would hurt the fund valuations and no doubt suppress interest rates so there is clearly some risk"Any broad crash would most likely be caused by RISING interest rates, wouldn't it?I just hope that LGEN's very clever very boring actuaries have got their sums right. I can see the logic of an oil company (say) feeling that its expertise lies in the awl biz rather than in the biz of harvesting and investing pension contributions from employer and employee in order to meet pension obligations entered into many years ago and satisfying some pencilneck regulator's requirement to assume that liability obligations should be priced on the basis of a risk-free discount rate.So it makes plenty of sense to me that the oil company should outsource the risk that it all goes pear-shaped to someone, such as LGEN, whose biz it is to price that risk appropriately.At the same time there is a nagging little devil sitting on my shoulder who says: "Can it really be true that all of those companies who want to get rid of the pension risk are actually wrong and that they should in fact retain the risk in-house?"The success of LGEN's moves to build up such pension business on its own books depends on LGEN being right and everyone else being wrong.LKH on the flybridge
Hydrogen Economy
16 Oct 2017
Re: Risk Taking I assume Telegraph meant illiquid as Games mentions. Hardly helpful to say the opposite of what you mean, after all communication is The Telegraph's core skill, or maybe not. LKHI agree that taking on company pension obligations at a time when the fund valuations and deficits are distorted by the unprecedented low interest rates and the highly restrictive valuation rules. The Companies will in many cases have to pay LGEN and others handsomely to relieve them of their future pensions obligations and hand over substantial assets which under any logical valuation strategy would no doubt cover the obligations. Clearly interest rate rises would help. Any broad crash would hurt the fund valuations and no doubt suppress interest rates so there is clearly some risk, but I would think no more than the pension business these Companies have operated for many years. I hold LGEN and a number of other companies in the sector with no plans to bail out for now. H2
LK Hyman
15 Oct 2017
Re: Risk Taking Games,"they will not be bought back by the companies that offloaded them like a hot potato."It was always the intention that LGEN take over the obligation to pay the pensions permanently, so there has never been any question of the companies buying them back. The companies were glad to get shot (for a price) of their obligations to pay pensions.Provided the medium and long term direction of interest rates is up rather than down LGEN should be fine.LKH on the flybridge
