L&G keeps silent on sums provided for compensation: Insurance group advances 56% for year

LEGAL & General, which accepted pounds 500m of personal pension transfer business, yesterday refused to disclose how much it has set aside to pay necessary compensation to investors.

David Prosser, chief executive, said L&G had made a prudent provision for pension transfers, calculated with the help of external actuaries. But he said giving a figure would only increase speculation about a topic already marred by sketchy information.

Financial regulators are still investigating the scale of the problems caused by life insurance salesmen who advised investors to switch their benefits out of an occupational pension scheme. Chris Hatry, L&G's managing director for sales and marketing, said there was 'a fundamantal economic logic for the great bulk of the transfer business that has taken place'.

Part of the problem lay with pension scheme trustees, who had an obligation to provide a fair transfer value for the benefits given up.

L&G was reporting a 56 per cent increase in annual pre-tax profits to pounds 181m. Profits from the main life and pensions business were barely changed at pounds 151.5m, but there was an pounds 88m turnaround on general insurance, which made pounds 27.3m.

Claims under mortgage indemnity insurance were covered by the large provision made in the 1992 results. Higher premiums also helped.

L&G has reduced its main 'reversionary' bonus rates on with-profits policies. However, good stock market returns last year allowed the company to increase some payouts. A pounds 30-a-month policy maturing after 25 years would pay pounds 62,043 this year, up from pounds 60,112 last.

L&G said it planned to join the Personal Investment Authority, the new financial regulator. However, Mr Prosser said some refinement was necessary, and suggested the PIA's board should consist solely of independent directors from outside the financial services industry.

A final dividend of 13.6p increases the total by 5 per cent to 20.1p a share.