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Legal & General is trading at 235p, down 2% after revealing a full-year pre-tax profit of £1.134 billion. This is up 10% on the previous year. The financial services group, which provides pensions, investments, life assurance and general insurance, raised its dividend by 22% to 9.3p. This is a sign the company is confident in generating profits and have a healthy cash balance.
The company also stated that new business strain came in at £40 million down from £93 million the previous year. New business strain measures the profitably of new insurance policies; the lower the figure, the better it is for the company.
The share price came under pressure in January when adverse weather impacted the insurance side of the business and fears over emerging markets prompted outflows of funds from the investment management division. Since the credit crises in 2008 the firm tripled its net cash position to £1 billion in 2013. This has led the share price to be up 445% over the past five years.
We have seen some profit-taking today but the share price is in a clear uptrend, finding support at 232p. The next support level below that is at the 100-daily moving average of 220p. Today’s dip could provide a buying opportunity.