Legal & General's chief executive under pressure to raise cash with a rights issue

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The Independent Online

Pressure to raise cash from a rights issue is likely to intensify for Legal & General's chief executive, Tim Breedon, when the company delivers its interim results to the City on Tuesday.

Mr Breedon, who handed back £1bn to investors on his arrival in the top job in 2007, could be forced into an embarrassing U-turn, tapping investors for money to shore up the firm's creaky capital position.

It has been suggested that Mr Breedon could sell the insurer's fund management arm, raising as much as £1.6bn, while its US division could be worth as much as £400m.

At the end of the first quarter, L&G, Britain's third-largest insurer, said it held a £1.6bn capital buffer, a figure that prompted a dive in the company's share price.

The company's shares have since rallied, but analysts at Deutsche Bank said last week that its current share price was difficult to justify.

Next week will be a busy one for the insurance industry, with Aviva, Standard Life, Old Mutual and RSA are all delivering announcements to the market.

Aviva is expected to reveal an improvement in its capital strength, boosted by a surge in equity prices.

The widely expected announcement of David Nish, Standard Life's finance director, taking over as chief executive is unlikely, however. Earlier in the year, Standard's chief executive, Sir Sandy Crombie, said he was standing down but declined to reveal when.

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