March 11 (Reuters) - British insurer Legal & General slightly missed annual profit expectations on Wednesday despite CEO Antonio Simoes' company-wide cost overhaul. The company reported 1.62 billion
Britain's L&G shares fall after earnings misses, lower solvency ratio
Legal & General's Financial Performance and Market Impact
By Iain Withers
Share Price Reaction and Earnings Overview
LONDON, March 11 (Reuters) - Shares of insurer Legal & General fell 6% in early trading on Wednesday after it missed analyst expectations for key earnings metrics, despite posting a 6% rise in annual core profit and launching a 1.2-billion-pound ($1.6 billion) share buyback.
CEO Strategy and Share Performance
CEO Antonio Simoes has pledged to improve performance and boost investor returns by simplifying the sprawling 190-year-old British group and by expanding its capital-light asset management and retail divisions. But the company's shares have lagged major rivals and remained broadly flat since he took the helm at the start of 2024.
That compares to gains of about 44% and 34% for rival Aviva and the wider FTSE 100 index, respectively, over the same time period.
Company Reshaping and Earnings Per Share
"In two years, we've reshaped the company," L&G's Simoes told Reuters, adding that core earnings per share growth of 9% was at the top end of its guided range.
Solvency Ratio and Investor Returns
L&G reported a core operating profit of 1.62 billion pounds, slightly below analyst expectations, while its Solvency II cover ratio - a key metric of financial strength - was 210%, down from 232%; that also missed forecasts.
Simoes said the company was "very comfortable" with its solvency ratio and the firm would return 2.4 billion pounds to investors over the next year.
In October, he told Reuters he had work to do to convince investors about the strategy.
L&G shares were down 5% at 0945 GMT, on track for their biggest daily decline in 11 months. The wider FTSE 100 index was down 0.9%.
Monitoring Geopolitical and Credit Market Risks
Impact of Iran War and Market Volatility
MONITORING IRAN WAR IMPACT
Simoes said L&G, which is also Britain's biggest investor with 1.1 trillion pounds in assets, was monitoring the potential market impact of the expanding U.S.-Israeli war on Iran, which has driven up oil prices and fuelled concerns about the global economic outlook. L&G is also a major investor in British government debt, where yields have spiked.
“As credit spreads widen, we actually have better results," Simoes said. "So we're monitoring the impact very closely, but we're pretty confident."
Private Credit Market Stresses and Partnerships
Stresses in the private credit market - particularly in the U.S. - are also on the company's radar, but L&G's approach to high-quality credit has not changed, he said. L&G struck a partnership with Blackstone in U.S. private credit last year.
($1 = 0.7438 pounds)
(Reporting by Iain Withers in London, Additional reporting by Yamini Kalia and Rishab Shaju in Bengaluru. Editing by Rashmi Aich, Mark Potter and Thomas Derpinghaus)
