Legal & General posts £1.5bn loss, cuts dividend
Legal & General has cut its final dividend for the first time in living memory following a £1.5 billion pre-tax loss, compared to an £848 million profit in 2007.
The UK’s fourth largest insurer slashed its dividend in half to 2.05p per share in a bid to preserve capital strength.
The cut will save the company £120 million.
Tim Breedon, L&G’s chief executive, said the decision was not “taken lightly.”
“The board has taken the view that the world is a very different place,” Breedon said.
“We considered all options including increasing it.
“Despite the strong cash flow and capital strength reported today we still feel the focus should be on the strength of the balance sheet.
“What we are saying is that capital and cash conservation is appropriate in a lot of circumstances, particularly when there is debt to roll over.”
The group blamed its £1.5 billion loss primarily on a 31% drop in equity investments and a 27% fall in the value of its property portfolio.
L&G’s share price dropped 7.4% to 39.7p following the announcement. The stock has dropped a total of 48% this year.