Legal & General (L&G) has revealed plans for a sweeping overhaul including the merger of its two asset management arms and a first share buyback in over a decade today, as new chief Antonio Simoes looks to set out a fresh direction for the company.
In a long-awaited strategy announcement, the FTSE 100 insurer’s chief pledged a “simpler” future for the firm and announced a £200m share buyback, in a major departure from the strategy of its previous veteran chief, Sir Nigel Wilson.
Under the plans, L&G said it will also now ramp up its lucrative pension risk transfer business and merge its two asset management arms, L&G Investment Management and Legal & General Capital, with the aim of creating an investment division generating revenues of some £100-150m over the next three years.
The long-awaited plans mark the culmination of a months-long review under Simoes, who joined L&G at the start of this year after Wilson’s 12 years at the top.
“Our vision is for a growing, simpler, better-connected L&G, focused on three core business divisions, and set apart by our shared sense of purpose and powerful synergies,” Simoes said in a statement.
António Simões: Santander’s European chief who took over at Legal and General
“By seizing the opportunity in Institutional Retirement while investing to scale and deepen our capabilities in Asset Management and Retail, we will evolve our business to better address society’s changing investment needs, and shift towards fee-based earnings at higher returns on capital.”
L&G has been making the majority of its cash in the so-called pension risk transfer (PRT) business in recent years, which involves buying up pension liabilities from corporate pension schemes.
Last year was a record year for the market with some £50bn worth of pension schemes secured in the UK alone, including L&G’s blockbuster deals to insure the Boots and British Steel Pension Schemes. L&G struck some £13.7bn in deals.
Investors have been keen for L&G to push further into the market while corporates are offloading schemes.
Simoes said he will now look to write £50-65bn in the UK by the end of 2028 to increase “store of future profit” and generate “permanent capital to catalyse asset management growth”.