- L&G, Britain's third-largest insurer, has announced that it made a a loss before tax of £1.38bn in 2008 on European embedded value basis , down from a profit of £1.71bn the year before. Losses were £1.49bn on an IFRS basis against an £883m profit last time. Gross written premiums rose to £5.9bn from £4.79bn in 2007.
- Loss primarily caused by the turmoil in the stockmarkets - the FTSE 100 index fell by 25% during 2008 - but its capital position was also weakened by its decision to double its provision against losses on credit defaults to £1.2bn last month.
- Chief executive Tim Breedon said that L&G was braced for a surge in bankrupcies - "Our bond portfolio is of high quality and well-diversified, but we have reflected heightened short-term risks by increasing provisions for non-profit annuity credit defaults to £1.2bn. This represents a historically high rate of provisioning, above levels needed to cover the worst default levels since the Great Depression."
- Halving its final dividend to 2.05p per share in an effort to conserve cash... with the exception of technical adjustments following a 2002 rights issue, it is the first dividend cut by the 172-year-old company in living memory.
Steady on, Tim, is it really going to be this bad?