Wow, I have been busy at work and missed these fireworks. On initial catch up looks very good and something very positive from our CEO. Seems to help the transformation of LGEN and enable us to grow further our revenues & EPS which are the main drivers. I have no intention to sell and have been accumulating continuously since 2017 to have a really big loading in my portfolio. I have maintained my belief in the fundamentals and the returns of LGEN in the next 20 yrs or more.. Great News !! |
Totally agree with MT and 1rob,
While taking 260 at the start of today looks the smart move right now I am happy to carry on holding with the security of that great divi.
Sure we may carry on dripping down into the weekend but it won't be long before we are pushing on towards 275 I feel.
Good luck all 👍🏻 |
 Some negativity wrt the dividend toward end of the article:
(Alliance News) - Legal & General Group PLC'S sale of its US protection business is a "surprise" but highlights the value on offer in the sector, analysts on Friday said.
London-based L&G is selling the US business for USD2.3 billion to Japanese mutual life insurance firm Meiji Yasuda Life Insurance. The US insurance entity includes L&G's US protection and US pension risk transfer arms.
The anticipated 2024 US statutory net assets of the businesses being sold is around USD850 million, L&G said. It expects the IFRS profit on completion to be greater than GBP1.0 billion.
The duo will establish a "strategic partnership" and Meiji Yasuda may snap up a stake in L&G.
The FTSE 100 listing said more than half of the deal proceeds will be returned to shareholders. L&G expects the transaction to complete towards the end of 2025.
Chief Executive Antonio Simoes called it a "transformative transaction" that brings "significant strategic and financial benefits".
"This strategic partnership brings together two highly complementary global businesses, with a shared ambition for growth, and will enable us to capitalise on the large market opportunities in US pension risk transfer while driving scale and profitability in global asset management," he added.
Shares in L&G jumped 5.5% to 252.00 pence each in London on Friday morning. The wider FTSE 100 was down 0.2%.
Derald Goh, insurance analyst at RBC Capital Markets, said the deal comes as a surprise as US protection and US PRT were not included in the 'corporate investments unit' that L&G set out at the Capital Markets Event last June.
In June, L&G announced a wide-ranging strategic review, including plans to sell some non-strategic assets. At the time, the US arm was seen as a core business, although it was assessed as having less of a strategic fit than other parts of the group.
UBS said the financials on the deal "screen attractive", noting the buyback back plans and earnings multiple on the deal of 30 times, which "looks attractive" relative to L&G's trading multiple.
The broker thinks the sale will act as a positive catalyst and expects a positive reaction in the near term, given the 5% equity stake taken in the group and the incremental share buyback.
On completion, Meiji Yasuda will own L&G's US protection business and have a 20% economic interest in its US PRT business, with L&G retaining 80% of existing and new PRT through reinsurance arrangements between L&G and Meiji Yasuda," L&G explained.
L&G said a partnership with Meiji Yasuda will look to "support L&G's growth ambitions" in US pension risk transfer and in asset management.
In addition, Meiji Yasuda plans to acquire a roughly 5% stake in L&G, "deepening the strong corporate relationship and bringing closer alignment of interest between the two companies".
Around GBP400 million of the proceeds from the unit sale will fund the US PRT offering. It added that GBP1.0 billion, more than half the proceeds, will be returned to shareholders.
"This would be incremental to the group's existing distribution policy. L&G therefore expects to return the equivalent of [around] 40% of its market cap to shareholders over 2025-2027 through a combination of dividends and buybacks. The remaining net proceeds from the transaction would be retained and invested to support the delivery of the group's growth strategy," L&G said.
Russ Mould at AJ Bell called it an "eye-catching deal".
He said it marked a "meaningful extension" to the two group's partnership although he accepted some investors are uncomfortable with the capital demands required in PRT.
"Perhaps the share buyback, returning a good chunk of the proceeds of the deal to shareholders, will help salve these concerns," he suggested.
Noting the taking of a 5% share stake, Mould said while there’s no suggestion this is the precursor to any sort of eventual takeover, it may nonetheless "set some tongues wagging."
L&G said the deal will increase the Solvency II ratio by around 22% at completion, and by around 7% post the proposed buyback.
L&G reiterated its guidance for 2024. It still expects to report mid-single digit growth in core operating profit. In 2023, L&G reported operating profit of GBP1.67 billion.
RBC's Goh estimates the deal is 1% to 2% accretive to earnings per share.
"L&G states that in 2024 the US protection business is expected to generate operating profits of USD90 million, while we expect the earnings impact from losing a 20% economic interest in US PRT is likely to be minimal. This compares with an around 7% reduction in share count from the buyback, resulting in the deal being core EPS accretive by [around] 1-2%," he explained.
Goh noted L&G states that in 2024 US protection and 20% of the US PRT business are expected to generate GBP350 to GBP400 million of operating surplus generation and GBP200 million to GBP250 million of net surplus generation.
However, he added L&G also states that the GBP1.2 billion capital generation from the transaction will be contributing to the cumulative Solvency II capital generation target.
"This will make ongoing dividend coverage more challenging," he suggested.
"The lower ongoing net surplus generation is a concern, with the dividend now appearing to be uncovered for a sustained period. However, the risk of a dividend cut is mitigated by the strong surplus capital position, and potential upside from asset management earnings," he added.
Goh thinks the deal highlights that there "remains significant upside to life insurer valuations, which is being recognised by long-term investors." |
marktime1231
I totally agree with you.
LGEN is heading for 7% yield 300p+ |
PO: I agree.. This is not a one off rise. This is the start of a reset in the perceived value of LGEN over the next 3 years.
What will the JApanese bring to the table...Interesting times..... |
Transformative indeed. And a well kept surprise. Who knew LGEN had such a valuable non-core US protection business. Presumably a for sale sign hoisted over the UK protection business too?
An additional £1B buyback on top of the existing £200M pa turns it into a meaningful programme. Let's not forget the pre-Christmas news that Simoes had identified more cash was available from lower than budgetted PRT capital strain. Intending to aggressively tap the huge US PRT market. The presentation this morning also pointed to the massive opportunity available to turn around asset management performance.
Despite some churlish caution from the fiona-moaner types this hits the spot, quite conceivably LGEN will be getting a push back towards £3 over the next 18 months. Very comforting, do not be easily tempted to offload this buy-and-hold winner, because at the end of the day it is all about the wonderful dividend stream. |
williamcooper104
I wish I'd over-exposed in only 1 stock! At least I've kept a few in LSEG. Bought most at £69 then took a profit. Bought fewer at £83.9; share price now £117 approximately. |
Can a trader let me know when the volume settles down (thinking of buying more if price and volume settle) |
There's certainly quite strong early volume to suggest some 'churning'.
It will be interesting to see where it finishes. |
yep,
That's about it. there is a smallish step up in what is being done today.
the main things that might move the share price is buying 5% open market (there is no commitment as to over what time period or that they will def do it) and, the implied readacross from the valuation on the US protection business.
Looks like I was right, sell into the opening spike and then buy back if yiou want to
- now down to 250 |
The problem with Trump (or one of the many problems) is that markets will increasingly ignore anything he says So will only sell of when he actually does something stupid |
a solid investment case further strengthened. 'heat' added! |
Yep - there's got to be more volatilityAgainst that I do see infra/renewables repricing on the back of BBGI I traded out of my last LGEN top up, but happy to hold the bulk |
agree with the ceo
transformative
the us pensions market is waiting to be plucked. joining forces makes entire sense.
the us news is what i have been waiting for. likely to be the re-rating i have waited so long for. buyback is a bonus, but the underlying business is the most important issue. vodafone board take note |
II morning report, doesn't really add anything. I think that since this deal is likely to be completed by the end of the year, LGEN will be a slow burner, gradually rising over the next 12 months with spikes and dips along the way. Todays rise has rather fizzled, LGEN looks like a classic case of patience being rewarded...
In London, Legal & General shot up 6.5%. It jumped on Friday after it said it would return an extra GBP1 billion to shareholders after agreeing to offload its US insurance entity.
The London-based insurer is selling the US business for USD2.3 billion to Japanese mutual life insurance firm Meiji Yasuda Life Insurance.
The duo will establish a "strategic partnership" and Meiji Yasuda may snap up a stake in L&G.
The FTSE 100 listing said more than half of the deal proceeds will be returned to shareholders. L&G expects the transaction to complete towards the end of 2025.
Chief Executive Antonio Simoes called it a "transformative transaction" that brings "significant strategic and financial benefits".
"Following completion, Meiji Yasuda will own L&G's US protection business and have a 20% economic interest in its US PRT business, with L&G retaining 80% of existing and new PRT through reinsurance arrangements between L&G and Meiji Yasuda," L&G explained. |
So this 40% of capital back over 3 years....
Before today L&G was giving about 25% to 30% over 3 years (eg about 10% dividend)...
So we're now getting an extra 3% a year back...
Plus Japanese buying 5% of the company.....
Blimey....
Is my understand of the situation correct?
If so this should really be trading at over 10% up on the news. |
《《 298;《 Dil 217 Feb '25 - 09:21
What a nice suprise to wake up to.
Should have a lie in more often if this is the result 》》 299;》
Can you please buy a shed load of shares in Angle plc then have a really, really, long lie in ? 😂 |
Hovering around 252
Might take off in a couple of days when the broker notes come out.
Not sure where this goes long term but LTHs haven't done well holding this versus a passive tracker either for UK and def not a global tracker.
i think there is a decision to be made |
So, you're going to spend the next 4 years dithering in fear of Trump? Plenty of other things to worry about everyday too. Great strategy!! Have you considered premium bonds? |
Williamcooper104. I am in the same position. I think I am going to be patient and sit on the uninvested cash I have. It would not surprise me to see the US market react badly to some inanity from Trump and drop 10-15% quite quickly - and taking international markets with it - before he rows it back. |
BBGI was my largest holding LGEN my third A good week But stuggling as to where to put cash as don't want to over expose to any one stock |
Buy, build, use the DRIP, hold for a decade, see what they owe you on at the end of the period on a total return basis and own them for nothing, with 40% to come back over 25/26/27 alone.. :o)
Unlikely to be buying at 220 pence again, but happy to have picked up some.. |
An it gets under 250 I will reinvest yesterday's winnings from BBGI |
Wonder where this will go this year ;-))... holding tight and want to add .. |
Not much to dislike with this share, ticks most boxes, a decent hold for income for me. |
Register to chat with like-minded investors on our interactive forums.
Hot Features
Premium
