Sunday 25 February 2018

Legal & General seals £650 million sale of mature savings business

Swiss Re will take on around one million L&G retail customers with traditional pensions, savings and investment products.

Legal and General Chief Executive Nigel Wilson (PA)
Legal and General Chief Executive Nigel Wilson (PA)

By Ben Woods, Press Association Chief City Correspondent

Insurer Legal & General (L&G) has offloaded its mature savings business to Swiss Re for £650 million as it looks to plough funds into “attractive growth opportunities”.

The ReAssure arm of the Zurich-based group will take on around one million L&G retail customers with traditional pensions, savings and investment products.

L&G said it will also ramp up its expansion plans, with investing and annuities, investment management and insurance all being primed for growth.

Chief executive Nigel Wilson said: “This was a difficult decision as with-profits savings has been a part of Legal & General’s UK business for over 50 years.

“However we have in Swiss Re a great partner, who will be an excellent steward of the business and its many customers and policyholders.

“Selling Mature Savings is the right decision for us, another important, measured, step in growing our company and updating our products.

“It will drive further earnings growth by allowing us to focus on our successful market-leading businesses and to accelerate the scaling up of our growth businesses.

“Under-saving, including for retirement, is an economic and social challenge for the UK, and Legal & General remains committed to providing attractive solutions to help our customers achieve their financial goals based around LGIM’s modern workplace savings, personal investment and intermediated product range.”

The mature savings business has £33 billion worth of assets under management, but is largely closed to new business.

L&G expects the deal to be complete by the middle of 2019, with Swiss Re taking on the “economic exposure” from the start of next year.

Shore Capital analyst Eamonn Flanagan said: “This disposal by Legals is consistent with the group’s emphasis on rationalising its operations, modernising its products and focusing on its key markets.

“We view this deal as smart, opportunistic and entirely consistent with the group’s strategy as regularly elucidated by the CEO.”

In a separate announcement, L&G said it had sold offices and homes in London’s Soho to Shaftesbury for £87 million.

The sale has handed L&G an “attractive return” on its investment after snapping up the asset for £67 million in January 2015.

L&G announced in August that it had booked a 27% increase in half-year operating profit to £988 million after a “greater than expected mortality experience” allowed it to release £126 million.

Press Association

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