L&G looks to expand overseas operations

Legal & General acknowledged yesterday that it needed to build its international business to avoid being pigeonholed as an "unloved" UK insurer.

Tim Breedon, L&G's chief executive, said: "If people take a negative view of the UK, they will be more negative to us. It is a slightly unloved sector.

"We can add overseas operations to the portfolio of businesses we have when it makes sense and can be done so there is a low risk with a relatively high return."

Mr Breedon said L&G is close to signing an agreement to sell life insurance through a joint venture with Bank of Baroda and Andhra Bank, state-owned Indian banks. That would be a step towards further measured international expansion in both developed and developing markets over the next five years, he said.

In developing markets, L&G would look to sell savings through bank distribution deals. In developed markets the company would focus on protection and corporate pensions business, Mr Breedon said.

"We will do it opportunity by opportunity, rather than saying, 'We must be in Vietnam – find me the best thing you can find.'"

L&G was one of the best performing UK insurers in 2006, but its shares have lagged the sector this year as investors have focused on acquisition activity and international growth in the sector.

L&G announced an 8 per cent drop in total new business for the first nine months of the year on slower sales of protection and annuity products and a drop in retail investments. But life and pension sales were up 11 per cent at £869m and new business at its fund management arm doubled to £32.4bn.

The company gets more than 90 per cent of its business from the UK, with international life and pensions operations in the US, the Netherlands and France.

Legal & General shares had fallen 16 per cent this year before yesterday but closed up 2.7 per cent at 135.2p.