Legal & General aims to return more than £5bn to shareholders within three years - are you eligible?

Pre-tax profits jumped to £542m from £195m in 2023.

In a boost for investors, L&G revealed plans to buy back £500m worth of shares in 2025 and said it will return more than £5bn – or 40 per cent of its entire stock market valuation – to shareholders within three years via dividends and buybacks.

Chief executive Antonio Simoes has been leading an overhaul of the company after taking over as group chief executive from Sir Nigel Wilson last year.

L&G has sold the group’s housebuilding division, Cala, for £1.35bn and its US protection arm for £1.8bn, while also forming strategic tie-ups.

The group is now focusing on its three core businesses – institutional retirement, asset management, and UK retail pensions and protection.

It has also created a corporate investments division which houses parts of the business earmarked for sale or offloading.

“We now have a plan in place for the disposal of each of the remaining assets in our corporate investments portfolio as we continue to simplify our business and unlock value to redeploy into our strategic businesses,” the group said.

As part of Mr Simoes’ new strategy, the company has also merged LGIM, its under-performing asset management arm, with L&G Capital, which is focused on infrastructure investment.

Mr Simoes said: “We are seeing positive commercial momentum as we execute our strategy with rigour and pace.”

He added: “We stated at our Capital Markets Event that we intended to return more to shareholders and that is exactly what we are doing.

“Our clear capital allocation framework supports our plan to return over £5bn over the next three years, through dividends and buybacks.”

Richard Hunter, Head of Markets at interactive investor, commented: “Legal & General is in the midst of a new chapter and is transforming, although given the nature of a business entrenched in investment, it is one which is viewed through the prism of the longer term.

“The progress of the group is almost swan-like, with gradual movements masking some furious paddling underneath the water.”

He added: “There is little doubt as to the longer-term potential for the savings and investment market, especially given ageing demographics and likely welfare reform. For L&G, an ability to participate in this market on a number of fronts, particularly the annuity and international angles should provide ongoing areas of growth.

"Amid such lofty ambitions, the wider sector malaise and some disappointing investment returns from its asset management businesses over the recent past has weighed on the share price, which has declined by 1 per cent over the last year, as compared to a gain of 9.7 per cent for the wider FTSE100, despite a hike of 9 per cent over the last six months.

"Indeed, over the last three years the price is down 5 per cent although has eked out a gain of 11 per cent over the last five. “Nonetheless, the revised strategy is underpinned by L&G’s capital strength and a defined and visible shareholder return programme, with the market consensus of the shares as a buy reflecting the long-term prospects.”