THIS ANNOUNCEMENT CONTAINS INSIDE
INFORMATION
L&G announces the sale of its US protection business to
Meiji Yasuda, and the creation of a long-term strategic
partnership, for a valuation of $2.3bn
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Longstanding partner Meiji Yasuda has agreed to purchase
L&G's US protection business and to establish a strategic
partnership with L&G to grow the US Pension Risk Transfer
business (taking a 20% interest in L&G's US PRT business) for a
combined equity value of $2.3bn
(£1.8bn[1])
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Meiji Yasuda intends to acquire a c. 5% shareholding in Legal
& General Group plc[2] and to build on its existing
partnership with L&G in asset management
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L&G anticipates an additional share buyback of £1.0bn
following completion[3] and now expects to return the
equivalent of c. 40% of its market cap to shareholders over
2025-2027 through a combination of dividends and
buybacks
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L&G Group CEO, António Simões,
and Group CFO, Jeff Davies, will host a virtual investor
presentation at 9am this morning (Friday 7 February 2025). You can
access the virtual call here
and the presentation slides will be made available
online shortly beforehand (at the same link).
The
Transaction
Legal & General Group Plc
("L&G" or the "Group") today announces that it has agreed the
sale of its US insurance entity[4],
comprising its US protection and US Pension Risk Transfer ("US
PRT") businesses, to Meiji Yasuda Life Insurance Company ("Meiji
Yasuda"), a Japanese mutual life insurance company, for an equity
value of $2.3bn (£1.8bn) payable in cash at completion (subject to
certain purchase price adjustments) (the "Transaction"). Following
completion, Meiji Yasuda will own L&G's US protection business
and have a 20% economic interest in its US PRT business, with
L&G retaining 80% of existing and new PRT through reinsurance
arrangements between L&G and Meiji Yasuda.
Under the terms of the Transaction,
the equity value of $2.3bn represents a compelling multiple to
estimated 2024 post-tax earnings.
The Transaction is expected to
complete towards the end of 2025 and is subject to customary
closing conditions and regulatory approvals.
The Group also announces the
formation of a long-term strategic partnership with Meiji Yasuda to
support L&G's growth ambitions in US PRT and asset
management:
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Meiji Yasuda intends to acquire a c.
5% shareholding in L&G, deepening the strong corporate
relationship and bringing closer alignment of interest between the
two companies.
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L&G and Meiji Yasuda will
partner to drive growth in the US PRT business.
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Meiji Yasuda will expand its
established partnership with L&G in asset management by
outsourcing the investment management of US PRT and protection
assets to L&G. In addition, the two companies will form a
long-term partnership in global private assets. This will include
significant co-investment into L&G's range of private assets
capabilities over several years, supporting the Group's ambition in
this business.
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Use of
Proceeds
L&G will receive estimated
proceeds of $2.3bn (£1.8bn) on completion of the Transaction.
Approximately £400m will be used to fund the US PRT reinsurance
arrangement described above, and the remainder will be deployed in
line with the Group's capital allocation framework.
In line with that framework, it is
the Group's current intention, subject to market conditions and
regulatory approval, to return £1.0bn to shareholders, which
represents more than half of the Transaction proceeds. This would
be incremental to the Group's existing distribution policy.
L&G therefore expects to return the equivalent
of c. 40% of its market cap to shareholders over 2025-2027 through
a combination of dividends and buybacks. The remaining net proceeds from the Transaction would be
retained and invested to support the delivery of the Group's growth
strategy.
The Transaction will increase the
Group's Solvency II ratio by approximately 22% at completion, and
by approximately 7% post the proposed buyback.
Strategic
Rationale
The Transaction supports L&G's
long-term strategic goals as set out at the Capital Markets Event
("CME") on 12 June 2024. Since then, L&G has made significant
progress in implementing its strategy, including new senior
management appointments, the sale of Cala and the strategic
investment in Taurus Investment Holdings.
This Transaction demonstrates
continued momentum in executing the strategy. We are committed to
growing internationally and this partnership will support growth in
our US PRT and global (including US) asset management propositions
while delivering increased returns to shareholders. It will also
provide capital to invest for growth across L&G's three
synergistic core businesses: Asset Management, Institutional
Retirement and UK Retail.
We reiterate the guidance for full
year 2024 of mid-single digit growth in core operating profit, and
confirm we are on track to achieve the Group targets set out at the
CME:
· 6-9%
CAGR in core operating EPS (2024-27)
· >20% operating Return on Equity (2025, 2026, 2027);
and
· £5-6bn
cumulative Solvency II capital generation over three years
(2025-2027).
We will include the anticipated
capital generation of the Transaction of approximately £1.2bn in
the calculation for Solvency II capital generation target, as the
Transaction will accelerate the expected future capital generation
of the US protection business.
We remain confident in meeting the
targets that we set out at the CME for our Institutional Retirement
and Asset Management businesses, which remain unchanged. We will
update the target for our Retail business, to reflect the sale of
the US protection business, at our Retail investor deep dive event
planned for H2 2025.
António Simões, Group Chief Executive Officer of Legal &
General said:
"This is a transformative transaction that brings significant
strategic and financial benefits to the Group and demonstrates our
commitment to deliver on our strategy - sharpening our focus on
core businesses, leveraging the synergies between them, and driving
sustainable growth to enhance shareholder
returns.
This strategic partnership brings together two highly
complementary global businesses, with a shared ambition for growth,
and will enable us to capitalise on the large market opportunities
in US Pension Risk Transfer while driving scale and profitability
in global asset management.
Today's announcement reflects our commitment to value creation
and shareholder returns as we expect to distribute c. 40% of our
market cap through dividends and share buybacks over the next three
years."
Hideki Nagashima, President and Group CEO of Meiji Yasuda Life
Insurance Company said:
"We are pleased to announce this landmark transaction, which
will accelerate Meiji Yasuda's international growth strategy -
strengthening our position in the US life insurance market,
deepening our long-standing partnership with L&G in asset
management, and enabling access to the US PRT market, where we will
benefit from L&G's market-leading expertise to unlock
sustainable growth together.
Our intention to acquire a 5% shareholding in L&G reflects
our confidence in their leadership, strategy and long-term
prospects."
Additional Financial Information
Key financial
information:
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The US protection business is
expected to generate operating profits of c. $90m in 2024 ($34m in
2023).
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The anticipated 2024 US statutory
net assets of the businesses being sold is c. $850m.
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The IFRS profit on completion of the
Transaction is expected to be greater than £1.0bn.
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In the 12 months to 31 December
2024, US protection and 20% of the US PRT business are expected to
generate c. £350-400m of Operational Surplus Generation, driven
largely by realising benefits in the back book on writing new US
protection business. After allowing for anticipated new
business strain, we expect a Net Surplus Generation ("NSG") of c.
£200-250m. The anticipated capital generation of approximately
£1.2bn resulting from the Transaction represents a multiple to
expected NSG of c. 5 times.
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Inside Information
The information contained within this announcement is deemed by Legal &
General Group Plc to constitute inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) No 596/2014 (as it
forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018).
By the publication
of this announcement via a Regulatory Information Service, this inside
information is now
considered to be in the public domain. The person responsible for
making this announcement on behalf of Legal & General Group Plc
is Geoffrey Timms.
Enquiries
Investors
Michelle Moore, Group Strategy &
Investor Relations Director
investor.relations@group.landg.com
+44 20 3124
3773
Gregory Franck, Investor Relations
Director
investor.relations@group.landg.com
+44 203 124 4415
Media
Natalie Whitty, Group Corporate
Affairs Director
Natalie.Whitty@group.landg.com
+44 738 443 5692
Lucy Legh / Nigel Prideaux / Charlie
Twigg, Headland Consultancy
LandG@headlandconsultancy.com
+44 20 3805 482
Notes
to Editors
About Legal & General
Established in 1836, Legal &
General is one of the UK's leading financial services groups and a
major global investor, with £1.2 trillion in total assets under
management (as at HY24) of which c. 40% (c. £0.5 trillion) is
international.
We have a highly synergistic business
model, which continues to drive strong returns. We are a leading
international player in Institutional Retirement, in Retail Savings
and Protection, and in both public and private markets through our
Asset Management division. Across the Group, we are committed to
responsible investing and dedicated to serving the long-term
savings and investment needs of customers and society.
As at 6 February 2025, Legal &
General has a market capitalisation of £14.1 billion.
About Meiji Yasuda Life Insurance Company
Meiji Yasuda Life Insurance Company
is headquartered in Tokyo, and is the oldest and one of the major
life insurance companies in Japan. It provides a variety of group
and individual life insurance products, bancassurance, and group
annuity products in Japan. It also has insurance operations in the
US, Poland, Thailand and China. Additional information about Meiji
Yasuda can be found at http://www.meijiyasuda.co.jp/english/.
About Legal & General America
Legal & General America's
individual life insurance division is part of the worldwide Legal
& General Group. For over 70 years, the Legal & General
America companies have been in the business of providing financial
protection through life insurance for American families. The Legal
& General America companies are Banner Life Insurance Company
and William Penn Life Insurance Company of New York. With more than
$105 billion in new coverage issued in 2023, LGA is a top three US
term life insurance provider with 1.4 million U.S. customers. LGA
shares Legal & General's independent financial strength
ratings: A+ Superior from A.M. Best and AA- Very Strong from
Standard and Poor's and Fitch. For more information, please
visit https://www.lgamerica.com.
About Legal & General Retirement America
Legal & General Retirement
America specializes in customized pension risk solutions for
institutional clients in the US market. Established in 2015, Legal
& General Retirement America is a business unit of Legal &
General America, Urbana, MD. Legal & General America life
insurance and retirement products are underwritten and issued by
Banner Life Insurance Company, Urbana, MD and William Penn Life
Insurance Company of New York, Valley Stream, NY. Banner products
are distributed in 49 states, the District of Columbia and Puerto
Rico. William Penn products are distributed exclusively in New
York; Banner Life is not authorized as an insurer in and does not
do business in New York. The Legal & General America companies
are part of the worldwide Legal & General Group.
Forward-looking statements
This announcement may contain
certain forward-looking statements relating to Legal & General,
its plans and its current goals and expectations relating to future
financial condition, performance and results. By their nature,
forward-looking statements involve uncertainty because they relate
to future events and circumstances which are beyond Legal &
General's control, including, among others, UK domestic and global
economic and business conditions, market related risks such as
fluctuations in interest rates and exchange rates, the policies and
actions of regulatory and Governmental authorities, the impact of
competition, the timing impact of these events and other
uncertainties of future acquisitions or combinations within
relevant industries. As a result, Legal & General's actual
future condition, performance and results may differ materially
from the plans, goals and expectations set out in these
forward-looking statements and persons reading this announcement
should not place reliance on forward-looking statements. These
forward-looking statements are made only as at the date on which
such statements are made and Legal & General Group Plc does not
undertake to update forward-looking statements contained in this
announcement or any other forward-looking statement it may
make.
No statement in this announcement is
intended as a profit forecast, profit estimate or quantified
financial benefits statement for any period and no statement in
this announcement should be interpreted to mean that earnings or
earnings per share for the Legal & General for the current or
future financial years would necessarily match or exceed the
historical published earnings or earnings per share of Legal &
General.
Rounding
Certain figures included in this
announcement have been subjected to rounding adjustments.
Accordingly, figures shown for the same category presented in
different parts of this announcement may vary slightly and figures
shown as totals in certain parts of this announcement may not be an
arithmetic aggregation of figures that precede them.
