FTSE 100 insurance giant’s operating profit rises 6% but falls short of analyst forecasts
Legal & General unveiled a share buyback scheme(Image: Newcastle Chronicle)
Legal & General’s share price fell in early morning trading after the asset management and insurance giant’s restructuring was overshadowed by weaker-than-anticipated profits.
Shares dropped 5.5 per cent to 244p on Wednesday, as core operating profit of £1.62bn missed analysts’ £1.65bn forecast, proving a “source of disappointment for investors”, despite climbing six per cent.
The FTSE 100 firm unveiled a £1.2bn share buyback scheme, which combined with dividend per share growth of two per cent, will deliver planned shareholder returns totalling £2.4bn.
Pre-tax profit rose to £807m, whilst earnings per share increased nine per cent to 20.9p. The board put forward a dividend of 21.7 pence, as reported by City AM.
L&G’s institutional retirement division secured £11.8bn of global pension risk transfer business, including £10.4bn in the UK, enabling the group to strengthen its market-leading position, whilst the “pipeline remains healthy”.
The group’s asset management operation witnessed “modest growth” in assets under management (AUM), recording £1.2 trillion in global AUM, with private markets contributing £75bn—a 32 per cent rise—driven by expansion across private credit, infrastructure and real estate.
It added that it remained confident in achieving its asset management profit target of £500m to £600m by 2028, amid a transition towards higher margin products. Workplace defined contribution pension schemes saw assets under administration (AUA) surge 21 per cent to £114bn, whilst net flows increased three per cent from £6.0bn to £6.2bn.
Platform membership reached 5.8m, with an additional £3.7bn of assets scheduled to be onboarded during the current financial year.
Richard Hunter, head of markets at Interactive Investor, said: “There is little doubt as to the longer-term potential for the savings and investment market, especially given ageing demographics and likely welfare reform, while the growing demand for retirement income is another tantalising string in the group’s bow.
“It now remains to be seen whether these numbers entice unconvinced investors back into the fold, where the market consensus of the shares as a hold has been in place for some time, although the initial price reaction suggests that there remains more work to do.”
Antonio Simoes, chief executive of L&G, highlighted the group had “addressed legacy complexities” and was “driving forward” its growth strategy across core operations, with analysts observing the group’s long-term plan is materialising.
Simoes said: “As a sharper, more focused business, we are well-positioned to capitalise on the structural, growing demand for long-term investments and retirement income.”
The company’s growing pension risk transfer division is also anticipated to drive expansion, with the UK market operating at £40bn to £50bn annually, meaning Legal and General’s £10.4bn accounts for roughly 20 per cent of market share.
Hugh Fairclough, partner and head of financial services at RSM UK, said: “What differentiates L&G is its integrated model.
“In a more competitive bulk annuity market, pricing alone no longer wins the biggest deals. The decisive factor is increasingly asset origination… That’s why we’re seeing an asset‐sourcing arms race across the pension risk transfer market, and why insurers with strong origination platforms are pulling ahead.
“With a 2026 pipeline that includes £17 billion of transactions actively being priced, and multiple £1bn‐plus deals already in view, L&G is well‐positioned to lead the next phase of market growth.”
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