12th Jun 2024 09:06
(Alliance News) - Legal & General Group PLC on Wednesday announced plans for a "simpler and better-connected business", focused on three core divisions, alongside a share buyback, as new Chief Executive Antonio Simoes attempts to make his mark on the London-based insurer.
"Over the last five months we have rigorously reviewed our business, listening to investors, customers, partners and employees. This work has deepened my belief in our strong foundations and excellent potential," Simoes commented.
However, shares in L&G were down 3.3% to 235.00 pence in London on Wednesday morning. The insurer was the worst performing stock in the FTSE 100 which was up 0.6%.
CEO Simoes, who joined L&G in January, is making his first significant pitch to investors and analysts on Wednesday at a Capital Markets Event, alongside Chief Financial Officer Jeff Davies.
In a statement ahead of that, L&G said it is targetting 6% to 9% core operating earnings per share compound annual growth between 2024 to 2027 at an operating return on equity of over 20%.
The insurer is eyeing GBP5 billion to GBP6 billion cumulative solvency II operational surplus generation across 2025, 2026 and 2027.
L&G also intends to return more to shareholders over 2024 to 2027, through a combination of dividends and buybacks.
The firm plans dividend per share growth of 5% in financial 2024 and a first share buyback of GBP200 million in 2024, followed by 2% dividend growth per annum out to financial 2027 and further similar buybacks.
The pace of dividend growth in financial 2024 would be unchanged from financial 2023, when L&G increased the payout by 5.0% to 20.34 pence from 19.37p a year prior.
L&G plans to focus on three divisions, Institutional Retirement, Asset Management and Retail.
In Institutional Retirement, L&G plans to grow pension risk transfer volumes, writing GBP50 to GBP65 billion in the UK by year-end 2028.
By financial 2028, L&G expects to grow Institutional Retirement operating profits at 5% to 7% compound annual growth.
In Asset Management, the insurer intends to invest to drive scale and profitability, achieving cumulative annualised net new revenue of GBP100 to GBP150 million between 2025 to 2028 and growing the Private Markets platform assets under management to GBP85 billion by financial 2028.
L&G proposes to create a single Asset Management division, bringing Legal & General Investment Management and Legal & General Capital together as a unified public and private markets asset manager.
In retail, L&G is targetting GBP40 to GBP50 billion of cumulative net flows in Workplace between 2024 to 2028.
By financial 2028, L&G expects to achieve 6% to 8% compound annual growth in operating profit.
In addition, a new Corporate Investments Unit will be created to maximise the value of non-strategic assets.
L&G said non-strategic assets, most materially housebuilder Cala, will be managed by this unit, with the goal of maximising shareholder value ahead of potential divestment.
Simoes said: "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."
By Jeremy Cutler, Alliance News reporter
Comments and questions to [email protected]
Copyright 2024 Alliance News Ltd. All Rights Reserved.
Related Shares:
Legal & General