How Does Legal & General Group Company Work?

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How Does Legal & General Group Operate?

Legal & General Group Plc, a major UK financial services firm founded in 1836, has been actively transforming its operations. Under CEO António Simões, 2024 was a year focused on renewal and strategic advancement.

The company has been consolidating its asset management arms and sharpening its focus on key business areas. This strategic repositioning aims to enhance adaptability in a constantly evolving financial landscape.

Legal & General manages £1.1 trillion in assets as of FY24, with a significant portion, nearly half, being international. Its market capitalization stood at £14.6 billion in March 2025. The firm excels in institutional retirement, asset management, retail savings, and protection. They are also committed to long-term investing and addressing societal needs through initiatives in housing and clean energy. Understanding the Legal & General Group BCG Matrix can offer further insight into their business segments.

Legal & General Group operates through three main divisions: Institutional Retirement, Asset Management, and Retail, all driven by a purpose of 'Investing for the long term. Our futures depend on it.' This structure allows the company to create and deliver value across a broad spectrum of financial services.

Institutional Retirement

This division focuses on global pension risk transfer, securing retirement benefits through buy-in and buyout solutions. In 2024, it achieved £10.7 billion in global PRT new business, with strong performance in North America and the UK.

Asset Management

Formed by combining LGIM and LGC, this division manages £1.1 trillion in assets as of December 31, 2024, offering solutions across public and private markets. A key growth area is its Private Markets platform, which aims to reach £85 billion in AUM by 2028.

Retail

The Retail division provides a diverse range of products including retail annuities, workplace savings, and lifetime mortgages. Retail annuity sales doubled in H1 2024 to £1.2 billion, and workplace DC net flows reached £3.2 billion in the same period.

Operational Strengths

The company leverages technology for digital platforms and forms strategic partnerships to enhance its distribution and competitive edge. This integrated approach supports its overall Revenue Streams & Business Model of Legal & General Group.

Financial Performance and Growth Drivers

The Institutional Retirement division's operating profit grew by 7% to £1,105 million in 2024, supported by its annuity portfolio. The Asset Management division's Private Markets platform is a significant growth driver, utilizing the group's balance sheet capital to foster new investment strategies.

• Institutional Retirement new business: £10.7 billion global PRT in 2024.
• Asset Management AUM: £1.1 trillion as of December 31, 2024.
• Private Markets AUM target: £85 billion by 2028.
• Retail annuity sales H1 2024: £1.2 billion.
• Workplace DC net flows H1 2024: £3.2 billion.

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Legal & General Group generates revenue through its core divisions: Institutional Retirement, Asset Management, and Retail. The company's financial performance in 2024 saw adjusted operating profit rise to £1,711 million from £1,667 million in 2023. This demonstrates a consistent growth trajectory in its diverse revenue streams.

Institutional Retirement

This division is a primary revenue driver, with operating profit increasing by 7% to £1,105 million in 2024. This growth is attributed to the expanding scale of back-book earnings and steady investment performance from its annuity portfolio.

Pension Risk Transfer

In 2024, the Institutional Retirement division secured £10.7 billion in global Pension Risk Transfer (PRT) new business. This substantial volume of new premiums significantly contributes to the division's revenue generation.

Asset Management Growth

The Asset Management division reported revenues of £967 million in 2024, a 4% increase from the previous year. This growth was achieved despite a slight decrease in average Assets Under Management (AUM), reflecting a strategic focus on higher-margin products.

Private Markets Expansion

The division's private markets platform, managing £57 billion in AUM in 2024, is a key growth engine. The company aims to reach £85 billion in AUM by 2028, leveraging balance sheet capital to capture new opportunities.

Retail Contributions

The Retail division saw strong performance with £1.2 billion in retail annuity sales in H1 2024 and £3.2 billion in Workplace DC net flows. The Retail Retirement segment, including mortgages, contributed £504 million to operating profit in 2024.

Protection Business Strength

Both the UK and US protection businesses demonstrated robust performance, adding to the company's overall revenue generation. This highlights the diversified nature of Legal & General's income sources.

Legal & General Group's monetization strategies are centered on securing profitable new business, with the adoption of the IFRS 17 accounting standard. This standard allows for the deferral of new business profits into the Contractual Service Margin (CSM) and Risk Adjustment (RA) on the balance sheet, recognized over the contract's lifecycle. The company also prioritizes disciplined capital allocation, aiming to enhance shareholder returns through dividends and buybacks, including a £500 million buyback planned for 2025 and an intention to return over £5 billion within three years. Understanding these revenue streams and monetization strategies is key to grasping the Competitors Landscape of Legal & General Group.

Profit Recognition and Capital Allocation

The company's approach to recognizing profits and managing capital is crucial to its financial strategy. The IFRS 17 standard plays a significant role in how profits from new business are accounted for over time.

• Profits from new business are deferred into the Contractual Service Margin (CSM) and Risk Adjustment (RA) under IFRS 17.
• These deferred profits are recognized in operating profit over the lifetime of the contract.
• Disciplined capital allocation is a core strategy for the company.
• Shareholder returns are managed through a combination of dividends and share buybacks.
• A £500 million share buyback program is planned for 2025.
• The company intends to return over £5 billion to shareholders within a three-year period.

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Legal & General Group has strategically evolved, consolidating its operations to enhance focus and leverage synergies. This approach aims to strengthen its purpose-driven mission across key divisions.

Strategic Consolidation and Divisional Focus

In 2024, Legal & General unified its Asset Management arms, merging LGIM and LGC. This move sharpened the company's focus on three core areas: Institutional Retirement, Asset Management, and Retail, fostering greater synergy.

Record Performance and Growth Initiatives

The Group achieved significant milestones in 2024, including writing over £10 billion in Pension Risk Transfer (PRT) deals globally and record retail annuity sales of £2 billion. Private Markets saw accelerated growth, reaching £57 billion in assets under management.

Divestments and Strategic Partnerships

To align with its focused strategy, Legal & General divested CALA Group for £1.35 billion and its US protection business. Strategic partnerships, including one with Meiji Yasuda and a significant July 2025 agreement with Blackstone, are enhancing its competitive positioning.

Competitive Strengths and Future Outlook

Legal & General's competitive edge stems from its strong brand, diversified model, and market leadership in PRT. The ability to leverage its balance sheet for asset management growth and its commitment to responsible investing are key differentiators.

Navigating Operational Challenges and Enhancing Value

While higher interest rates impacted operational surplus in H1 2024, Legal & General has responded by focusing on capital-efficient strategies and capitalizing on record volumes in key markets. The company is actively adapting its operating model to capitalize on structural growth trends and transition to a more capital-light approach.

• Record PRT volumes in the US and Canada in 2024.
• Retail annuity sales reached £2 billion in 2024.
• Private Markets AUM targeted to reach £85 billion by 2028.
• Sale of CALA Group for £1.35 billion.
• Strategic partnership with Blackstone announced in July 2025.
• The company's approach reflects its Mission, Vision & Core Values of Legal & General Group.

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Legal & General Group plc is a major player in the financial services sector, holding a significant market position, especially within the UK. With a market capitalization of £14.6 billion as of March 2025, it stands as one of Europe's largest asset managers, overseeing £1.118 trillion in assets under management as of December 31, 2024. The company's robust Solvency II coverage ratio of 232% in 2024 underscores its financial strength.

Industry Position

Legal & General Group is a leading financial services company with a strong presence in the UK and Europe. It is recognized as one of Europe's largest asset managers, managing substantial assets under its purview.

Key Business Areas

The company strategically focuses on Institutional Retirement, Asset Management, and Retail sectors. This focus positions it effectively within critical segments of the financial services industry.

Financial Resilience

Legal & General demonstrates strong financial resilience, evidenced by its high Solvency II coverage ratio of 232% in 2024. This indicates a solid capital buffer to meet its obligations.

Competitive Landscape

The company operates within a competitive financial services market, particularly in UK retail protection. It also faces challenges from client portfolio adjustments impacting asset under management.

Understanding Legal & General Group plc involves recognizing the inherent risks it navigates and its strategic approach to future growth. Regulatory shifts, such as the implementation of IFRS 17, can influence profit recognition timing for certain business lines, although the overall earnings impact is not altered. Economic variables, including interest rate fluctuations and inflation expectations, can introduce investment variances. The competitive nature of the UK retail protection market presents ongoing challenges. Furthermore, outflows from UK defined benefit clients, a consequence of portfolio rebalancing due to improved funding levels, led to a 4% decrease in the asset management division's overall assets under management in 2024.

Future Outlook and Growth Strategy

Legal & General has established a clear strategic plan aimed at achieving sustainable growth and improving returns. The company is targeting a compound annual growth rate (CAGR) of 6-9% in its core operating earnings per share (EPS) between 2024 and 2027. It also aims for an operating return on equity (ROE) exceeding 20% during the 2025-2027 period.

• Targeting 6-9% CAGR in core operating EPS (2024-2027).
• Aiming for over 20% operating ROE (2025-2027).
• Projecting £5-6 billion in cumulative Solvency II capital generation (2025-2027).
• Expanding private markets assets under management to £85 billion by FY 2028.
• Targeting £40-50 billion in cumulative net flows for Workplace DC (2024-2028).
• Planning 5% DPS growth to FY24 and 2% DPS growth annually from 2025-2027.
• Announced £200 million in share buybacks for 2024, with further similar buybacks anticipated.

The company's strategic initiatives are designed to bolster its performance across key segments. In Pension Risk Transfer (PRT), Legal & General aims to increase UK volumes to £50-65 billion by the end of 2028. The Asset Management division is focused on growing its private markets platform assets under management to £85 billion by FY 2028 and achieving £100-150 million in cumulative Annualized Net New Revenues (ANNR) between 2025 and 2028, with a goal for 70-75% of its earnings to be fee-related by 2028. For its Retail division, the company targets £40-50 billion in cumulative net flows within Workplace Defined Contribution (DC) schemes from 2024 to 2028. Legal & General also plans to enhance shareholder returns through a combination of dividends, with a projected 5% dividend per share (DPS) growth to FY24 and a 2% DPS growth per annum for 2025-2027, and share buybacks, including £200 million in 2024 and further similar buybacks planned. This forward-looking approach emphasizes disciplined capital allocation, a streamlined group structure, and a transition towards a more capital-light operational model to ensure sustained profitability and value creation for its stakeholders. Understanding the Target Market of Legal & General Group provides further context to these strategic objectives.

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