L&G benefits from a demand for pensions and saving plans

Nick Raynor, investment adviser at The Share Centre, explains what this means for investors.

"This morning, L&G announced a 28% increase in sales across the board as the company prospered from government benefit cuts. This meant people had been forced to take matters in to their own hands regarding pensions and saving plans.

"It is L&G's exposure to emerging markets that is its strength. The company's Indian joint venture is doing well, as in the first full year of trading it has sold over 130,000 policies. It is also promising to hear of plans to replicate this success in other emerging markets; however this is in its infancy.

"The final dividend increased 25% to 3.42p, making the total for 2010 4.75p. This is an attractive offer; however we feel there is little potential for growth in the share price in the short to medium term.

"Our preferred pick in the insurance sector is Aviva due to its more established international presence and stronger dividend policy. We suggest investors who already hold L&G continue to do so but new investors should look elsewhere."