(Alliance News) - Legal & General Group PLC's new chief executive on Wednesday flagged a fresh start for the insurer after operating profit in 2023 fell short of market estimates.

The London-based insurer and asset manager reported flat operating profit in 2023 of GBP1.67 billion compared to GBP1.66 billion in 2022. The was below consensus of GBP1.80 billion.

Citi analyst Andrew Baker said: "We expect some weakness today on the lower operating result in a challenging operating environment."

Shares in L&G were down 2.8% to 238.50 pence in early exchanges in London on Wednesday. The wider FTSE 100 index was up 0.2%.

Pretax profit tumbled 91% to GBP76 million from GBP868 million and earnings per share declined by 43% to 7.35 pence from 12.84p.

L&G reported solvency II capital generation of GBP1.82 billion, little changed from GBP1.81 billion in 2022, and raised the dividend by 5.0%, as expected, to 20.34 pence from 19.37p.

L&G reiterated its intention to raise the dividend by 5% again in 2024.

Net surplus generation was GBP1.38 billion, down from GBP1.45 billion, reflecting the impact of higher volumes of pension risk transfer business.

Chief Executive Antonio Simoes, who joined L&G in January, said now was time to "take a fresh perspective, build on our track record and set out a vision for profitable and sustainable growth".

Simoes had been Banco Santander SA's regional head of Europe. He replaced Nigel Wilson, who retired after a decade in post.

Simoes said he would outline his strategy for L&G and plans at a capital markets event on June 12.

Simoes said L&G was on course to achieve its five-year targets, and had demonstrated resilience in "challenging markets" to achieve record new business volumes in pension risk transfer, UK annuities and US protection, increasing our store of future profit.

"Our international assets under management and alternative assets portfolio continue to grow, as does our position in the UK defined contribution pensions market," he added.

L&G said retail operating profit decreased by 2% to GBP408 million from GBP415 million, although insurance operating profit increased 22% to GBP436 million from GBP357 million.

Operating profit in L&G's retirement institutional arm increased by 10% to GBP886 million from GBP807 million, underpinned by the growing scale of back-book earnings and the consistent investment performance of our annuity portfolio.

LGRI reported record new business volumes, writing GBP13.72 billion of of global PRT compared to GBP9.54 billion in 2022, at a solvency II new business margin of 7.4%, in line with its long-term expectation.

By Jeremy Cutler, Alliance News reporter

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