Legal & General dividends under threat

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The Independent Online

Legal & General, one of the UK's biggest insurers, is set to cut or scrap its dividend for the first time when it reports full-year results this week.

Some analysts believe that L & G's chief executive, Tim Breedon, has underestimated the liabilities in the insurer's bond portfolio by as much as £4.8bn. They are also worried about its exposure to defaults on interest payments.

Mr Breedon may have been over optimistic when he indicated earlier in the year that the dividend would be retained. Analysts reckon the final dividend may be cut by around 17 per cent to help shore up its cash position. There is also speculation it may launch a rights issue to bolster capital ratios.

L & G's chairman, Sir Rob Margetts, recently agreed to stay on for another year after the board decided not to go ahead with the appointment of Sir James Crosby just days before he became involved in the HBOS whistleblower furore.

Sir Rob, who has been chairman since 2000, was planning to step down at the end of May, but he has agreed to stay on for another 12 months as a suitable successor had not been found.

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