Rating agency AM Best has affirmed the grades of British insurance giant Legal & General (L&G), which is forecast to withstand market pressures and the consequences of the UK’s decision to leave the European Union.
The agency recently affirmed the financial strength rating of A+ (Superior) and the issuer credit rating of “aa-” of Legal and General Assurance Society, the largest operating insurance company in the L&G group.
The ratings reflect the insurance firm’s “strong earnings track record, solid business profile and excellent risk-adjusted capitalisation,” said AM Best, which assigned a stable outlook for each of the ratings.
However, AM Best warned that low interest rates, financial market volatility and regulatory changes in L&G’s core market are expected to put pressure on the company’s potential performance.
Negative impact on investor and consumer confidence following the Brexit vote in July may also affect L&G’s revenue and profitability.
“In spite of these pressures, AM Best expects results to remain good, supported by the group’s strong market position in the UK and its increasingly diversified business profile,” AM Best said.
Earlier this month, L&G reported a 23% rise in profits for the first half of 2016, with pre-tax profits swelling to £826 million.
The company’s retirement business saw profits climb by 44% to £406 million, but insurance profit fell by £186 million to £138 million.
Company CEO Nigel Wilson said he remains confident that L&G will continue to deliver attractive returns amid market and political uncertainties.
“Our five long-term growth drivers, ageing populations, globalisation of asset markets, creating real assets, welfare reform and digital remain unaffected and will continue to provide many growth opportunities,” Wilson said.
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