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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 LGEN, +17.47% 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 UKX, +2.33% 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 RR, +16.05%, 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 GVC, +18.13% 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 GBPUSD, +0.20% 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.
