British insurer Legal & General posted a 14 per cent rise in 2015 operating profit on Tuesday, in line with forecasts, but a capital position below some expectations put pressure on its shares.

Insurers are reporting solvency capital ratios for the first time under new European rules. Analysts are taking a close look at insurers’ capital buffers, even though regulators say they are hard to compare.

Legal & General said it had a solvency capital ratio under new European rules of 169 percent. A ratio of 100 per cent shows insurers have sufficient capital to cover underwriting, investment and operational risks. "This is relatively a weaker capital position within the UK life insurers," said JPMorgan Cazenove analysts in a client note, reiterating an 'underweight' recommendation on Legal & General stock. Other analysts, however, said the capital ratio was within their expected ranges.

Legal & General shares were down 4.7 per cent at 231 pence by 0817 GMT, one of the worst performers in the FTSE 100 index , and dropping from two-month highs set in the previous session. The company reported a rise in operating profit to £1.46 billion, boosted by demand for products such as lifetime mortgages and a reduction in the level of capital set aside for its annuity business. The profit was in line with expectations from analysts in a company-supplied poll. Net cash generation was £1.26 billion, against a forecast of £1.22 billion.

Legal & General Investment Management, one of the biggest investors in the UK stock market, had assets under management of £746 billion, a rise of 8 per cent, after seeing external net inflows of £37.7 billion.

Legal & General said it would pay a total dividend of 13.4 pence a share, up 19 per cent from 2014 and in line with forecasts.

Reuters