Shares in Legal & General (L&G) rise 1.3 percent, among the top gainerson the FTSE 100, after the insurer posts operating profit marginallyabove consensus and unveils a bigger-than-expected dividend.
L&G, Britain's fourth-biggest insurer by market value, made a 2012 operatingprofit of 1.09 billion pounds ($1.6 billion), up 3.2 percent on the previousyear and above the average analyst forecast of 1.08 billion pounds in a companypoll.
"Legal and General has delivered exactly what traders wanted ... an increasein full-year profits and more importantly in their full year dividend, which isup 20 percent from last year," John Truong, senior trader at Accendo Markets,says.
L&G has rallied strongly since the start of 2012, up 57 percent in the last14 months, and with dividend yield expectations for the insurance sector amongthe highest in Europe -- top analysts expect European insurers to yield 5.2percent in the coming year, compared with an average 4 percent across allEuropean large and mid-cap stocks, according to Thomson Reuters Starmine data --it is important for the company to sate investors' hunger for yield.
"This definitely puts the boot into L&G's peer, Royal Sun Alliance,who had instead decreased theirs ... The next question though is what will Aviva do tomorrow? A cut in their dividend will definitely not be appreciated,"he says.
Top analysts expect Aviva to grow its dividend by 24.3 percent in the coming12 months, according to Starmine data.
Reuters messaging rm://david.brett.thomsonreuters.com@reuters.net
Legal & General (LGEN)
