Legal & General has denied it needs to raise fresh capital from investors, nor will it cut its dividend, following funding rumours which knocked its share price yesterday.
After reports of secret talks with the FSA over its capital position, Legal & General has today issued a series of statements to the Stock Exchange to reassure investors. The firm says it is strengthening its capital reserves to help it deal with increased defaults due to the recession, but has denied it is in any financial difficulty. At the end of 2008, L&G held a capital surplus of over £1.6bn, but claims it would be prudent to raise its credit default reserves over the next four years. Credit default assumptions will rise from a long-term average of 30 basis points per annum to 13...
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