L&G targets PRT volumes of up to £65bn by 2028 as part of strategy refresh

Move aims to increase store of future profit and help catalyse asset management growth

Jonathan Stapleton
clock • 3 min read
António Simões took on his role as CEO of L&G at the beginning of the year
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António Simões took on his role as CEO of L&G at the beginning of the year

Legal & General (L&G) has set out a refreshed strategy and financial targets, saying it will focus on three core divisions – institutional retirement, asset management and retail – going forward.

The renewed strategy follows a review by the group's chief executive António Simões – who took on his role at the beginning of the year – and comes as the insurer also announced a £200m share buyback for 2024 as the first step of plan to increase returns to shareholders.

PRT

Legal & General said it was "well placed" to seize what it saw as a "significant" institutional retirement opportunity, both in the UK and internationally – noting that only around 10% of the £6.6trn of defined benefit assets in the UK, US, Canada and the Netherlands has so far transferred to insurers.

The firm said that, in the UK alone, it expected market volumes to average around £45bn per annum over the next decade.

It said by year end 2028, it expected to see institutional retirement operating profits increase on a compound annual growth rate of 5-7%.

And it added it would aim to write £50bn-£65bn of UK pension risk transfer (PRT) business at a capital strain of less than 4% between 2024 and 2028.

Legal & General said the renewed focus on PRT would increase its store of future profit3 and generating permanent capital to catalyse asset management growth.

Asset management

Legal & General said it was also going to focus on its investment management business – bringing Legal & General Investment Management (LGIM) and Legal & General Capital together to create a single "unified" public and private markets asset manager.

L&G said it planned to "materially scale" its in-house and origination platform capability in private markets ­– significantly expanding its capabilities and client offerings across real estate, private credit and infrastructure, including through an accelerated programme of fund launches.

It said it would aim to achieve cumulative annualised net new revenues of £100m-£150m between 2025 and 2028 and grow its private markets platform assets under management to £85bn by 2028, up from £48bn in 2023.

L&G said Michelle Scrimgeour had announced her intention to step down as chief executive of LGIM – noting it would now begin a search for a CEO to lead its combined asset management division. It said, until this appointment is made, Scrimgeour would lead the transition and establishment of its new asset management division with Laura Mason, the chief executive of LGC, who has now been appointed as CEO of private markets.

Retail

L&G also said it planned to invest to drive growth in retirement and savings – recognising the opportunities presented by the growth in defined contribution and decumulation assets, and the corresponding customer need for support and guidance.

It said it would focus on scaling its workplace platform profitably, leveraging areas such as its master trust position. It said it would also make better use of technology and AI to improve efficiency and customer experience.

By 2028, it said it expected to generate £40bn-£50bn of workplace net flows.

Commenting on the strategy refresh, Simões said: "L&G is in prime position to respond to and benefit from major structural and societal changes. Changing demographics, climate transition, economic uncertainty and technology are driving demand for trusted, experienced investors that can manage risk through the cycle, originate productive assets, and deliver returns for savers."

He added: "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 seizing the opportunity in institutional retirement while investing to scale and deepen our capabilities in asset management and retail, we will evolve our business to better address society's changing investment needs, and shift towards fee-based earnings at higher returns on capital. We will make the most of our international business opportunities, with a particular focus on the US.

"The strategy and targets set out today signal L&G's ambition and commitment to invest to grow our business, and reward our shareholders for their support."

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