Legal & General dividend hopes rise

Legal & General posted a solid set of results today to renew hopes that it could restore its dividend payment to former glories.

In the past two years, L&G has suffered a battering such as no other major player in the sector has experienced, with repeated suggestions that it might be forced to seek safety in the arms of a richer parent.

As it fought to retain cash it slashed the payout to investors last year, the first time it had done so.

Today L&G said it had generated cash of £650 million in the year to the end of December, suggesting it can easily afford to reward long-suffering shareholders.

The fund management arm had inflows of £8.9 billion, taking total assets to £315 billion. L&G's surplus — its buffer against market meltdown — soared from £1.9 billion to £3.1 billion.

Its chief executive, Tim Breedon, said: "Equity markets have recovered and the economy is now moving up, albeit slowly."

He dismissed the notion that the company was ever in trouble as "a false perception", saying: "Insurers are not banks and the read-across from them to us was based on a faulty premise. We had a good crisis."