Key Takeaways
- Legal & General (LGEN) experienced approximately 6% decline on Wednesday following underperformance against analyst projections
- Core operating profit increased 6% to reach £1.62 billion, falling marginally below market expectations
- Solvency II ratio declined to 210% from previous 232%, underperforming analyst targets
- Company announced record-breaking share buyback program worth £1.2 billion
- Combined shareholder returns totaling £2.4 billion planned for the coming year
Legal & General reported annual core profit growth of 6% for 2025, yet market reaction proved unfavorable. Share prices experienced significant declines as analysts highlighted shortfalls against forecasts alongside deteriorating solvency metrics.
Legal & General Group Plc, LGEN.L
Core operating profit reached £1.62 billion, landing marginally beneath analyst projections. Profit before tax surged 143% to £807 million — though this figure remained substantially below the consensus estimate of approximately £1.19 billion.
Core earnings per share advanced 9% to 20.93p, achieving the upper limit of L&G’s own 6–9% guidance range. Company leadership characterized this achievement as encouraging evidence of business momentum.
Market participants responded by offloading shares. During mid-morning London trading, LGEN traded down approximately 5.7% to 243.8p — tracking toward its steepest single-day decline in 11 months.
The Solvency II coverage ratio emerged as another area of market concern. The metric registered at 210%, retreating from the prior year’s 232%. This figure also underperformed analyst expectations, representing a critical indicator market participants monitor for financial resilience.
CEO António Simões addressed the concerns directly. He expressed the company remained “very comfortable” with its capital position and highlighted the £1.2 billion share buyback — representing L&G’s largest repurchase program historically — as evidence of management confidence.
“In two years, we’ve reshaped the company,” Simões stated to Reuters. He characterized L&G as “a sharper, more focused business” emerging from a restructuring period.
Capital Returns and Operational Results
Combined planned investor returns amount to £2.4 billion across the upcoming 12 months, with over £5 billion targeted throughout 2025 to 2027. Dividend per share growth guidance stands at 2%.
The pension risk transfer segment delivered robust performance. L&G executed £11.8 billion in global bulk annuity transactions, with £10.4 billion originating from UK operations. Workplace defined-contribution assets under administration expanded 21% to reach £114 billion.
Asset management operations demonstrated progress as well. Private markets assets climbed 32% to £75 billion, while average fee margins widened to 9.1 basis points.
Analyst Andreas Van Embden at Peel Hunt characterized the release as a “solid set of results, broadly in line with estimates at the operating level,” while noting a 4% shortfall in net asset value attributable to investment variances.
Abid Hussain at Panmure Liberum observed the figures “look fine year-on-year but appear to have generally missed or be in line with expectations.”
Tracking Iran Conflict Developments
L&G, overseeing £1.1 trillion in assets, maintains vigilant observation of market dynamics. Simões indicated the firm actively monitors potential market ramifications from the escalating U.S.-Israeli war on Iran, which has driven oil prices upward and intensified concerns regarding global economic prospects.
L&G maintains substantial holdings of UK government debt, where yields have climbed. Simões noted that wider credit spreads actually enhance the company’s financial outcomes. “So we’re monitoring the impact very closely, but we’re pretty confident,” he stated.
The organization also identified pressures within the U.S. private credit market as an area requiring attention. L&G established a partnership with Blackstone in U.S. private credit during the previous year, with Simões affirming its strategy toward high-quality credit remains unchanged.
Forward guidance for 2026 projects core operating EPS growth maintaining position at the upper end of the 6–9% range, with robust bulk annuity volumes anticipated to persist.
