Published by Global Banking and Finance Review
Posted on March 12, 2025
By Chandini Monnappa and Shashwat Awasthi
(Reuters) -Britain's Legal & General will return about $6.5 billion to investors via buybacks and dividends over three years as it tries to cement their confidence in a revamp.
The life insurer and asset manager has sold its U.S. protection business for $2.3 billion and UK housebuilder CALA Group in a 1.35-billion-pound deal since António Simões became CEO in 2023, as it focuses on core businesses.
L&G's shares, which have gained more than 6% this year, slipped about 2%. Analysts at RBC Capital Markets said pre-tax profit under IFRS accounting was "materially below" their estimate and contractual service margin was 3% weaker than expected.
But Simões shrugged off Wednesday's price dip during a conference call.
"This is about the long term. The strategy we have outlined in June, the vision, is for a growing, simpler, better connected L&G that's more capitalised over time. These things take time," he said.
"My job is to continue to deliver, day-in and day-out, and then for the market to recognise that."
The company forecast continued growth in retail annuities - a sentiment echoed by Hargreaves Lansdown's senior equity analyst, Matt Britzman.
"L&G is well placed to benefit from the renewed appetite from both individuals and institutions to de-risk their pensions, with the bulk annuity market a particularly strong driver of capital over the long term," he wrote.
Bulk annuities provide insurance for corporate pension schemes, allowing companies to offload risk from their balance sheets.
A report in January said British pension insurance deals totalled 45 billion pounds in 2024, with 40-50 billion pounds expected this year.
L&G reported core operating profit of 1.62 billion pounds for the year ended December 2024, up from 1.53 billion pounds a year earlier, in line with expectations.
It said it would buy back 500 million pounds of shares this year, about 50 million above Jefferies' consensus expectations.
($1 = 0.7745 pounds)
(Reporting by Shashwat Awasthi, Chandini Monnappa and Yamini Kalia, editing by Sinead Cruise)
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