Legal & General Group Plc (L&G) has reached an agreement to sell its US insurance business to Japan’s Meiji Yasuda Life Insurance Co for $2.3 billion, as part of a broader effort to refine its strategic focus.
The transaction, announced today, includes L&G’s US protection and pension risk transfer (PRT) operations.
According to Bloomberg, Meiji Yasuda will acquire full ownership of L&G’s US protection business while also securing a 20% economic stake in its US PRT unit. Additionally, the Japanese insurer will purchase a 5% equity stake in L&G. The transaction is expected to close by the end of 2025, pending regulatory approvals.
L&G plans to allocate £1 billion ($1.24 billion) of the proceeds toward share repurchases. A further £400 million will be directed toward a reinsurance arrangement under which L&G will maintain an 80% interest in the U.S. PRT business.
L&G chief executive António Simões highlighted the strategic and financial benefits of the transaction with Meiji Yasuda.
“This is a transformative transaction that brings significant strategic and financial benefits to the group, sharpening L&G’s focus on core businesses and driving sustainable growth to enhance shareholder returns,” he said, as reported by Bloomberg.
Following the announcement, L&G shares rose as much as 11.4% in early London trading, marking their largest single-day gain since November 2020.
The sale aligns with a broader shift in L&G’s business strategy under Simões, who took over as CEO in 2023.
The firm has been restructuring its portfolio to emphasise asset management, institutional retirement, and the UK retail sector. As part of this transformation, L&G agreed last September to sell its UK homebuilder, Cala Group, for £1.16 billion. The company has stated that these moves are designed to return more capital to shareholders between 2024 and 2027.
For Meiji Yasuda, the acquisition is part of a wider push to expand internationally amid demographic challenges in Japan.
The insurer, based in Tokyo, has been pursuing opportunities abroad to counteract the effects of a shrinking domestic population. In a related move, its US subsidiary, StanCorp Financial Group Inc, is acquiring Allstate Corp’s benefits unit for approximately $2 billion.
Analysts at RBC, led by Mandeep Jagpal, noted in a research report that the financial impact of L&G’s reduced stake in the US PRT market is expected to be “minimal”. The firm had previously classified the US protection business as having lower strategic importance compared to other segments.
L&G has stated that, following the completion of the sale, it expects to return around 40% of its market capitalisation to shareholders between 2025 and 2027 through dividends and share buybacks. The company reaffirmed its 2024 earnings guidance, projecting mid-single-digit growth in core operating profit.
With this divestment, L&G aims to concentrate capital and resources on its primary business segments, reinforcing its focus on asset management and long-term savings products in the UK market.
