Legal & General, a prominent UK-based insurance and asset management group, has announced a significant restructuring plan under the leadership of its new chief executive, António Simões. The company aims to streamline its operations, focusing on three core divisions and capitalizing on the rapidly growing market for corporate pension deals.
As part of the strategic shift, Legal & General plans to intensify its efforts in the pension sector, targeting the completion of £50bn to £65bn in deals within the UK by 2028. This ambitious goal represents a substantial increase from the company’s previous target of £40bn to £50bn. Simões emphasized the immense potential in this market, noting that only 10% of the £6.6tn in defined benefit pension assets across the UK, US, Canada, and the Netherlands have been transferred to insurers thus far.
To further streamline its operations, Legal & General will merge its Legal & General Capital division, which focuses on infrastructure and building projects, with its traditional asset manager, Legal & General Investment Management (LGIM). This move will create a unified global asset management business, including a new private markets division. As a result of this restructuring, Michelle Scrimgeour will step down from her role as chief executive of LGIM, and the company will conduct a global search for a new chief executive to lead the expanded division.
In addition to these organizational changes, Legal & General plans to divest non-strategic assets, with the housebuilder CALA Homes being the most significant. The company will also sell legacy land and real estate holdings, such as a shopping center in Bracknell, Berkshire. However, Legal & General remains committed to investing in affordable homes, which Simões described as a “key strategic business.”
Despite the comprehensive nature of the restructuring, Simões assured that there would be no redundancies. Instead, the company aims to achieve efficiencies across its operations, such as reducing the number of cloud providers. Simões emphasized that the changes are part of a growth plan and that the company is investing to expand its business.
To reward shareholders, Legal & General announced plans to return more capital in the coming years. The company will initiate a £200m share buyback this year and increase its dividend by 5%. Furthermore, the company has committed to a 2% annual dividend growth until 2027, accompanied by additional share buybacks.
While the company’s share price experienced a decline of more than 5% following the announcement, Simões remains confident that the strategic changes will position Legal & General for long-term sustainability, even after the surge in pension transfers subsides. The company’s focus on growth, efficiency, and shareholder returns underscores its commitment to adapting to the evolving financial landscape while maintaining its core values and sense of purpose.
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