Legal & General says met collateral calls without difficulty

In This Article:

LONDON, Oct 4 (Reuters) - Legal & General Group said on Tuesday it would continue to support pension fund clients buffetted by sudden rate hikes but had not experienced difficulty in meeting collateral calls and has not been a forced seller of gilts or bonds.

In a trading update, the company said market volatility had increased significantly in the second half of the year, but this has had "limited economic impact" on its businesses and its expectations for full year operating profit and capital generation were unchanged.

"One of the strengths of the UK insurance regime is that we regularly monitor and stress our capital and liquidity requirements to a 1 in 200 stress level so that we can withstand shocks like we have seen in the past few days," the company said, referring to a rapid rises in UK government bond yields, which had triggered a liquidity crisis in many UK pension funds.

"We hold considerable buffers over these prudent requirements and have a wide array of tools available to manage collateral calls," it added.

The group estimates its solvency coverage ratio to be between 235-240%, up at least 23 percentage points as at Sept. 30 compared with the half-year 2022. (Reporting By Sinead Cruise; editing by Dhara Ranasinghe)