Free asset ratios
, which measure the extent to which a life office's assets exceed its liabilities, have traditionally been used as a measure of financial strength.
Analysts at French bank BNP Paribas expect the group to report a free asset ratio
- a measure of its financial strength - of around 12.5 per cent, well above the four per cent regulatory minimum and more than double Britannic's last reported position.
Since September, the fund's free asset ratio
has fallen from a relatively healthy 9.5 per cent to six per cent - anything below that would not be 'comfortable' given Britannic's revised outlook for the stockmarket this year.
Mr Andrew Palmer, L&G's finance director, denied that the issue had been triggered 'as such' by this summer's fall in share prices - though it will have the effect of restoring L&G's critical free asset ratio
to 12.4 per cent from about ten per cent with the Footsie 100 at 4,000.
Britannic's, profit was lower than many expectations, but its free asset ratio
- the level of assets remaining after liabilities and solvency margins have been met - was 9.5 per cent, better than some forecasts.
Chairman David Newbigging said Friends' free asset ratio
, the key measure of a life company's solvency, was ten per cent at the end of June, down from 12.8 per cent in December, but still well clear of the required minimum of four per cent.