Legal & General (L&G) has announced a definitive agreement to sell its US insurance entity, encompassing its US protection and US Pension Risk Transfer (PRT) businesses, to Meiji Yasuda Life Insurance Company for $2.3 billion.
The transaction is expected to close towards the end of 2025, pending regulatory approvals and customary closing conditions.
Strategic Partnership and Future Plans
Following the completion of the sale, Meiji Yasuda will assume ownership of L&G’s US protection business and hold a 20% economic interest in L&G’s US PRT business. L&G will retain 80% of its existing and new PRT business through reinsurance arrangements with Meiji Yasuda.
This strategic partnership aims to bolster L&G’s growth ambitions in the US PRT and asset management sectors.Meiji Yasuda intends to acquire approximately 5% of L&G’s shares, reinforcing the corporate relationship and aligning interests between the two companies.
Additionally, Meiji Yasuda will expand its partnership with L&G in asset management by outsourcing the investment management of US PRT and protection assets to L&G.
The companies also plan to form a long-term partnership in global private assets, with significant co-investment into L&G’s private assets capabilities.
Capital Allocation and Shareholder Returns
L&G intends to allocate approximately £400 million of the transaction proceeds to fund the US PRT reinsurance arrangement. Subject to market conditions and regulatory approval, L&G plans to return £1 billion to shareholders via share buybacks.
The company anticipates returning around 40% of its market capitalization to shareholders between 2025 and 2027 through a combination of dividends and buybacks.
Executive Commentary
The Group CEO of Legal & General described the deal as a “transformative transaction” that brings significant strategic and financial benefits to the group. He emphasized the commitment to sharpening focus on core businesses, leveraging synergies, and driving sustainable growth to enhance shareholder returns.
The President and Group CEO of Meiji Yasuda stated that the transaction will strengthen Meiji Yasuda’s position in the US life insurance market, deepen their partnership with L&G in asset management, and enable access to the US PRT market.
Streamlining Operations
The sale aligns with L&G’s strategy to streamline operations and improve its business model. The company’s share price has faced challenges over the past three years, prompting a strategic review and a commitment to ramp up its PRT business and merge its asset management arms.
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2025-02-07 12:43:16
