Legal & General is poised to delve deeper into the asset management markets, having outlined its ambitious growth plan on Tuesday.
The company’s asset management division, which manages £1.1 trillion in assets, has set targets for the upcoming year to exceed £500m in operating profit, as reported by City AM.
If achieved, this would represent a significant leap from £400m in 2024.
Eric Alder, the chief executive of Legal & General’s asset management division, stated: “Asset management’s synergistic relationship with the broader L&G Group provides a structural advantage as global demand accelerates for sophisticated investment solutions.
“Within the broader L&G ecosystem, our balance sheet acts as a permanent source of capital-catalysing new fund strategies and driving fee growth.”
This development comes as competitors retreat from asset management operations, with French Insurer Axa selling its asset manager to BNP Paribas last August and British insurer Aviva downsizing its equities unit.
The business is set to refocus on US operations and expand activities across private markets, wealth and wholesale.
This follows L&G’s acquisition of US real estate investor Proprium, in an effort to further solidify its presence across the Atlantic.
Legal & General also plans to push ahead with its Private Markets Access Fund, which has grown to nearly £1bn in less than a year.
Analysts back Legal & General stock
The management is targeting a cost-income ratio of below 70%, a decrease from 74% in 2024, to improve the firm’s efficiency.
Abid Hussain, an analyst at Panmure Liberum, believes this goal is achievable, especially considering the company’s historical performance and potential positive net inflows.
Hussain predicts that growth in defined contribution pensions and annuity business will counterbalance the decline in traditional defined benefit pensions in the UK.
Panmure Liberum has given L&G stock a ‘buy’ rating, setting a target price of 335p, and forecasts core earnings per share growth of 6-9% for 2024, aligning with the group’s expectations.
Alder commented: “We’ve taken important early steps and I’m energised by the pace of delivery – investments in Taurus and Proprium, alongside momentum in private markets and major client wins, are proof points of this strategy in action.
“With clarity of purpose, disciplined focus, and the backing of the wider Group, we are exceptionally well placed to deliver for clients and shareholders alike.”
