Shares in Resolution (LSE: RSL) rose by more than 5% in early trade this morning, after largely positive half-time results from the insurance company.
Earnings per share jumped up a very healthy 17% to 13.26p, against H1 2012’s 11.32p, although the interim dividend was held steady at 7.05p per share despite a 50%+ increase in the share price over the last 12 months.
Pre-tax profit lifted to £191m from £163m in the first of last year, though when adjusted for the Market Consistent Embedded Value, it fell slightly from £235m to £214m due to the “expected impact of the long-term interest rate environment.
But it was the growth of new business that helped propel the share price this morning, with the value of new business up 41% to £89m following strong growth in the UK division. New business internationally fell marginally, but reflected “resilient performance in difficult markets”.
Chief executive Andy Briggs commented:
“We continue to make excellent operational progress in line with the clear and consistent strategy and value agenda of the Group. The strong performance announced today reflects the attractive strategic outlook of the Group and has been led by the UK division where higher value of new business has been written at a lower cash cost.
“We have continued to deliver cash from our Heritage division and made good progress on International strategy implementation. This financial discipline underpins strong growth in cash generation and I remain confident about the future prospects of the Group.”
On the surface, then, Resolution looks like an interesting growth-and-income stock — offering a consensus yield of 6.5% — though it’s worth noting the dividend cuts by sector rivals such as Aviva and RSA Insurance, and thus important as ever to undertake the proper research before deciding whether to take the plunge or not.
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> Sam does not own shares in Resolution.
