L&G proclaims 'return of consumer confidence'

Legal & General, the UK's fourth biggest insurer, issued a bullish trading statement yesterday, announcing a 20 per cent increase in second quarter new business volumes and heralding the return of consumer confidence to the financial services market.

Legal & General, the UK's fourth biggest insurer, issued a bullish trading statement yesterday, announcing a 20 per cent increase in second quarter new business volumes and heralding the return of consumer confidence to the financial services market.

The group, which is due to release its interim results in four weeks, said growth over the past three months had been "significantly above" the market's expectations, led by particularly strong sales in its group protection and unit-linked bond divisions. The shares raced up more than 4 per cent on the news to 98.5p, giving the company a market value of £6.4bn.

David Prosser, the group chief executive, said: "We believe this reflects a return of consumer confidence in financial products reinforced by the continuing trend towards those companies which offer the combination of financial strength, operating efficiency and good value for money."

The company also announced a move towards a more conservative method of calculating mortality risk for its annuity business, to reflect the fact that people are living longer. The move will see L&G increase its reserves by £100m, leading to a reduction in embedded value of about 3p a share.