By Steve Goldstein, MarketWatch
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.