Asset management and insurance giant Legal & General has reported a six per cent increase in core operating profit for the first half of 2025 after recording steady growth across all three of its business arms.
Core operating profit increased to £859m while IFRS profit before tax rose to £406m, up 28 per cent.
Core operating EPS rose nine per cent to 10.94p, in line with expectations of full year core operating EPS growth to be in line with the company’s three year target range between six and nine per cent.
The company’s Solvency II capital generation increased to £729m while its Solvency coverage ratio fell from 232 per cent to 217 per cent, reflecting the large final 2024 dividend and allowing fully for the £500m buyback.
The company remains on track to meet its commitment to return over £5bn to shareholders within three years, with 90 per cent of the £500m buyback announced in the 2024 full year results now complete.
Legal & General’s global moves
During the first half of the year, Legal & General sold its US insurance business to Japanese insurance company Meiji Yasuda, for £1.72bn ($2.3bn) in its aim to redeploy capital to support the growth of its core divisions and expand growth potential in the US.
It also completed the acquisition of Proprium Capital Partners, a global real estate investor, as part of its plan to increase its presence in international markets.
The interim dividend rose to 6.12p in line with the company’s intention to drive the dividend per share up two per cent per annum until 2027.
Business performance
Overall, Legal & General recorded strong commercial growth across its three business divisions.
Institutional retirement wrote £3.4bn in global pension risk transfer (PRT) deals during the period, and the company continues to expect £40bn to £50bn of risk transfer deals across the UK market this year. Divisional core operating profit rose 11 per cent to £618m from £557m.
The company has doubled down on its asset management arm, as it continues to expand internationally and sell more-private market products such as pension schemes.
Efforts to shift towards higher-margin products were received well, as revenues grew by two per cent
However, operating profit fell from £214m to £202m, reflecting market volatility and a weaker USD, causing a one per cent lower average for assets under management (AUM).
Retail operating profit increased by three per cent to £237m, predominantly driven by the investment performance of its annuity portfolio.
Expansion in Workplace Defined Contribution (DC) continued as assets under administration (AUA) surpassed £100bn, with net flows up 21 per cent to £400bn.
CEO Antonio Simoes said, “The outlook for the business is positive and we are firmly on track to achieve our financial targets.”
The insurance company has maintained its forecast expectations for the year, expecting strong capital generation.