Legal & General Says IFRS 17 Accounting Transition Doesn't Change Strategy, Solvency or Dividends

   By Elena Vardon

Legal & General Group on Wednesday said the transition to the IFRS 17 accounting standard doesn't change its strategy, solvency or dividends, and backed its five-year targets.

The British insurer said the accounting change--which was implemented on Jan. 1--only affects the reporting of its annuity and protection business and changes the timing of recognition of earnings from its Legal & General Retirement Institutional and its Retail units but not the quantities.

It said that under IFRS 17, the company recognized 13.6 billion pounds ($17.29 billion) in stock of value in the contractual service margin, or CSM, and risk adjustment--RA--as of Dec. 31. This amount is future value that will unwind into profits as experience plays out in line with expectations, the London-listed group said.

"Looking forwards, we expect the adoption of IFRS 17 to result in a more stable and predictable operating profit profile for L&G through steady CSM and RA releases," the group said.

L&G said it is on track to meet its goal to make between GBP8 billion and GBP9 billion of capital over 2020 to 2024 and for earnings per share to grow faster than dividends, with net surplus generation cumulatively exceeding dividends.

Write to Elena Vardon at elena.vardon@wsj.com

(END) Dow Jones Newswires

July 05, 2023 02:38 ET (06:38 GMT)

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