Insurance giant Legal & General said on Monday that it has improved the return on equity (RoE) and profitability of new business within its American subsidiary after completing a further phase of its capital efficiency programme.
On December 31st 2012, L&G used a "reinsurance solution" to improve L&G America's (LGA) capital position by replacing the need for temporary financing, a total benefit of $345m, the company said in a statement.
As such, L&G Group's Insurance Group Directive (IGD) surplus has increased by £172m. IGD refers to capital adequacy requirements that insurance companies are subject to.
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Since it started in 2010, the capital efficiency programme in total has deliver $735m of capital benefit for LGA and a total benefit to the L&G Group IGD surplus of £402m.
"We are pleased to have delivered these two further phases in 2012, ahead of the schedule indicated at the 2012 half year results," L&G said.
The firm said that this programme has helped LGA grow its core term product over 11 straight quarters, with annual premiums written during the third quarter of 2012 rising by 31% year-on-year from $29m to $38m. Meanwhile, the new business margin has risen from 4.9% in 2009 to 10.9% (in the first half of last year) helped by the more efficient capital structure.
"This December 2012 transaction, as part of a series of related transactions over the last few years, further demonstrates how the US and UK parts of Legal & General work together for a single purpose," said LGA President and Chief Executive Officer Jimmy Atkins.
"It demonstratesour ability to design and execute financial plans as needed to optimise capital across our legal entities, which in turn fuels our strong growth in the US."
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