Legal & General shares slide after profit disappoints
Legal & General share price tumbled in early morning trading, after the asset management and insurance giant’s reshape was overshadowed by lower-than-expected profit.
Shares fell 5.5 per cent to 244p on Wednesday, after core operating profit of £1.62bn fell short of analyst’s £1.65bn expectation, creating a “source of disappointment for investors”, despite it rising six per cent.
The FTSE 100 company launched a £1.2bn share buyback programme, which with dividend per share growth of two percent, will bring planned returns to shareholders to £2.4bn.
Profit before tax grew to £807m, while earnings per share climbed nine per cent to 20.9p.
The board proposed a dividend of 21.7 pence.
Structured growth
L&G’s institutional retirement arm secured £11.8bn of global pension risk transfer business, including £10.4bn in the UK, allowing the group to extend its leading position in the market, while the “pipeline remains healthy”.
The group’s asset management business saw “modest growth” in assets under management (AUM) recording £1.2 trillion in global AUM, with private markets bringing in £75bn a 32 per cent increase off the back of growth across private credit, infrastructure and real estate,
It added that it remained confident in delivering its asset management profit target of £500m to £600m by 2028, amid a shift towards higher margin products.
Workplace DC pension schemes saw assets under administration (AUA) jump 21 per cent to £114bn, with net flows rising three per cent from £6.0bn to £6.2bn.
Platform members reached 5.8m, with a further £3.7bn of assets set to be onboarded during this 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.”
More work to do
Antonio Simoes, chief executive of L&G, noted the group had “addressed legacy complexities” and was “driving forward” its growth strategy across the core businesses, with analysts noting the group’s long term plan is taking shape.
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 firm’s expanding pension risk transfer business is also expected to boost growth, with the UK market running at £40bn to £50 bn a year, meaning Legal and General’s £10.4bn makes up 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.”