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April 6, 2020, 8:15 a.m. EDT

Legal & General surges after defying regulator request in paying a dividend

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By Steve Goldstein, MarketWatch


Getty Images
A man wearing a protective face mask walks past the Bank of England in the City of London, England, on March 30, 2020.

Insurer Legal & General was the standout mover in London markets on Monday, after defying a Bank of England request by paying a dividend.

Legal & General shares /zigman2/quotes/201125471/delayed UK:LGEN -0.63%  jumped 18% after saying it plans to pay its final dividend of 12.64 pence, taking the total payout for the year to 17.57 pence, which is a growth rate of 7%.

The Bank of England’s Prudential Regulation Authority had said banks shouldn’t pay a dividend, though it gave a little more leeway to insurers, saying they “ should satisfy themselves that each distribution is prudent and consistent with their risk appetite .”

“This is an important data point for U.K. life insurers and the insurance sector given [European Insurance and Occupational Pension Authority] and other regulators are encouraging (re)insurers to temporarily suspend dividends and share buybacks,” said Colm Kelly, an analyst at UBS.

Legal & General said its solvency position “remains robust” — UBS’s Kelly estimated it was 173% for the first quarter.

More broadly, the FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +2.04%  jumped 1.9% in midday trade, advancing as other global markets did on data showing slowing growth of new coronavirus cases and deaths.

Rolls-Royce /zigman2/quotes/203646520/delayed UK:RR -0.84% , the engine maker, shot up 19% after halting its dividend, pulling its financial guidance and announcing a new credit line worth £1.5 billion.

GVC Holdings /zigman2/quotes/207493593/delayed UK:GVC +0.05%  also rallied after halting its dividend, with the sports-gambling operator climbing 21%. GVC now sees a COVID-19 hit of approximately £50 million a month to operating profit from a previous estimate of £100 million a month, due to various cost-savings measures, notably the U.K. government’s furlough program.

The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.0077%  moved off the lows on Sunday when U.K. Prime Minister Boris Johnson was hospitalized with the coronavirus, in what 10 Downing Street said was a precautionary trip.

/zigman2/quotes/201125471/delayed
UK : U.K.: London
236.90 p
-1.50 -0.63%
Volume: 14.64M
Aug. 12, 2020 4:35p
P/E Ratio
11.44
Dividend Yield
7.42%
Market Cap
£14.15 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/210598409/delayed
UK : FTSE UK
6,280.12
+125.78 +2.04%
Volume: 651,724
Aug. 12, 2020 4:59p
loading...
/zigman2/quotes/203646520/delayed
UK : U.K.: London
271.40 p
-2.30 -0.84%
Volume: 7.45M
Aug. 12, 2020 4:35p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
£5.29 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/207493593/delayed
UK : U.K.: London
785.40 p
+0.40 +0.05%
Volume: 2.03M
Aug. 12, 2020 4:35p
P/E Ratio
N/A
Dividend Yield
2.24%
Market Cap
£4.58 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/210561263/realtime/sampled
US : Tullett Prebon
1.3032
+0.0001 +0.0077%
Volume: 0.0000
Aug. 12, 2020 5:50p
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Steve Goldstein is MarketWatch markets editor for Europe. Follow him on Twitter: @MKTWgoldstein.

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