L&G makes £64m loss on Cofunds sale but retirement business booming
Legal & General (L&G) has confirmed the sale of its investment platform Cofunds to Aegon led to a £64m impairment loss.
The £140m deal was announced in August last year, with the sale completing in January and making Aegon the UK's biggest platform provider.
Nevertheless, the provider booked overall profits of £1.6bn, largely driven by growth in its retirement business which saw operating profits of £811m, according to its end-of-year results published 8 March.
New business in the retirement arm was up 190% in 2016, soaring from £2.9bn in 2015 to £8.5bn last year. The firm stated this was due to higher demand for its de-risking strategies.
It completed £3.7bn of buy-in and buyout transactions, more than 50% higher than the £2.4bn of deals in 2015. Last year's transactions included a £1.1bn buyout of the Vickers Group Pension Scheme, the largest deal last year, and an additional longevity swap of £900m.
The growth in its de-risking business looks set to continue as the firm said it is currently quoting around £13bn of buy-in and buyout deals.
It added: "Two-thirds of large pension plans expect to use pension risk transfer by 2020, and consequently our UK market pipeline for pension risk transfer remains strong."
The firm's investment management arm saw its assets under management (AuM) up 20%, climbing from £746.1bn in 2015 to £894.2bn last year. However, net flows for UK institutional defined benefit schemes fell from £24.1bn in 2015 to £11.2bn.
For defined contribution (DC) (AuM), the figure was down £0.9bn to £2bn, despite a 23% increase in customers to more than 2.2 million people. It has also more than doubled the number of DC schemes it supports, from 4,376 to over 9,400.
It anticipates the number of DC customers reaching 2.5 million people by the end of this year.
DB deficit
The firm also revealed the aggregate deficit of the L&G Group Pension and Assurance Fund and the L&G Group UK Senior Pension Scheme grew by 21% over 2016.
The schemes' combined deficit was £374m at the end of 2016, compared to £308m in 2015.
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