Legal & General Group (LON:LGEN) used its full-year 2025 results presentation to emphasize continued earnings growth, a strengthened capital position following the sale of its U.S. protection business, and a stepped-up capital return program that includes its largest-ever share buyback.
Chief executive António Simões said the group delivered “a strong 2025” with core operating EPS up 9%, at the top end of its guided 6% to 9% range. Solvency II operational surplus generation (OSG) rose 5% to £1.5 billion, while OSG per share increased 8%. The group reported a Solvency II coverage ratio of 210% on a pro forma basis after completing the sale of its U.S. protection business to Meiji Yasuda for $2.3 billion.
Strategic shift: non-core disposals and simplified portfolio
Simões framed the update as the culmination of a strategy launched when he became CEO in 2024, focused on “disposing of non-core assets, establishing rigorous capital discipline, and putting in place a refreshed leadership team.”
He highlighted several actions:
- Completion of the sale of the U.S. protection business to Meiji Yasuda, alongside a growing strategic partnership in which Meiji Yasuda is building a 5% shareholding in the group.
- Since establishing the Corporate Investments Unit (CIU) in the second half of 2024, completion of £1.5 billion of asset disposals.
During Q&A, management said it is “drawing a line” on further transfers into the Corporate Investments Unit and expects CIU-related negatives to be “zero going forward,” while noting transformation and restructuring costs would continue.
Business performance: Institutional Retirement leads, Asset Management “inflection point,” Retail growth
New CFO Andrew Kail, presenting his first results in the role, reported core operating profit up 6% to £1.6 billion. He said operating profit increased in Institutional Retirement and Retail, while Asset Management operating profit was “broadly stable” but at an “inflection point” that management expects will translate into improved results in 2026.
Institutional Retirement operating profit increased 6% to £1.2 billion. The annuity portfolio grew to £75 billion, up 12%, driven by pension risk transfer (PRT) flows. Legal & General wrote close to £12 billion of PRT in 2025, including more than £10 billion in the UK, which Kail said represented about 25% market share. Management cited an active UK pipeline of £17 billion and said it had “line of sight” of more than 10 schemes exceeding £1 billion. Asset optimization in Institutional Retirement contributed £258 million, more than double the prior year.
Asset Management operating profit was £402 million. Revenues grew 4% to over £1 billion, aided by a higher fee margin of 9.1 basis points, up from 8.8 basis points. Expenses increased 5% as the company invested in growth initiatives and its platform, resulting in a cost-income ratio of 75%. Management reiterated a profit target for Asset Management of £500 million to £600 million by 2028, but said balance sheet investments are now expected to contribute £80 million to £100 million of profit—about £50 million lower than previously guided—reflecting a pivot toward fee earnings and a portfolio review that moved roughly £200 million of assets into the Corporate Investments Unit.
Retail operating profit increased 4% to £447 million, helped by higher releases and an expected investment margin, as well as £73 million of asset optimization. Workplace defined contribution (DC) assets grew 21% to £114 billion, and the company noted £3.7 billion of scheme wins expected to be onboarded over the next 12 months. In retail annuities, Legal & General wrote £1.8 billion of new business, with management pointing to acceleration in the second half and a strong start to 2026.
Capital, solvency, and the new coverage range
One of the key new disclosures was management’s medium-term Solvency II coverage target operating range of 160% to 190%. Kail said the company expects to deploy capital to support growth ambitions and move into that range from the current level.
In Q&A, management stressed that reaching the lower end of the range is not an automatic trigger for capital actions and said the dividend remains sustainable even at a lower ratio. Kail added that actions could include adjusting the level of new business written depending on the strain environment, but the firm expects to continue writing business within the target range.
Kail also noted that debt leverage increased to 33% on a pro forma basis following the sale of U.S. Protection and the related buyback, but said it remains within comfort levels and is expected to decline over time as own funds grow. Management said rating agencies currently have the group on strong ratings with stable outlooks.
Explaining investment variances and ongoing costs
Management devoted significant time to explaining investment variances, which Kail said were “improved compared to recent years” but still material at £771 million in 2025. He argued that not all adverse variances erode long-term value and broke the drivers into categories including modeling and assumption changes, market impacts on the annuity portfolio, shareholder fund performance versus long-term assumptions, and revaluations in sectors such as commercial real estate and venture capital.
Kail said the company has seen no defaults in the annuity asset portfolio since 2008, when defaults were “extremely small” at £25 million, and that 99% of the portfolio is investment grade. He also said the group’s long-term expected blended return assumption is around 6%, including cash.
Separately, Kail said the company incurred close to £200 million of M&A, restructuring, and transformation costs outside operating profit in 2025, and he expects costs in that line to remain around £100 million to £200 million per year over the next two years.
Looking to 2026, Simões said the company expects another year of core operating EPS growth at the top end of the 6% to 9% target range, citing momentum across Institutional Retirement, Asset Management, and Retail.
About Legal & General Group (LON:LGEN)
Legal & General Group Plc provides various insurance products and services in the United Kingdom, the United States, and internationally. It operates in Legal & General Retirement Institutional (LGRI), Legal & General Investment Management (LGIM), Legal & General Capital (LGC), and Retail segments. The LGRI segment offers annuity contracts with guaranteed income for a specified time; and longevity insurance products. The LGIM segment offers index fund management; active fixed income funds and liquidity funds; active equity management; solution and liability driven investment; multi-asset funds; corporate pension scheme solutions; and real assets.
