Legal & General to sell US protection business to Meiji Yasuda
Legal & General is selling its US insurance entity, Legal & General America, to Japanese life insurer Meiji Yasuda for an equity value of $2.3 billion, payable in cash.
Legal & General America is the parent company of Banner Life and William Penn, which write L&G’s US protection and US Pension Risk Transfer business.
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. The Japanese company intends to acquire a ~5% stake in L&G, “deepening the strong corporate relationship and bringing closer alignment of interest between the two companies.”
Meiji Yasuda will expand its established partnership with L&G in asset management by outsourcing the investment management of US PRT and protection assets to L&G. In addition, the two companies will form a long-term partnership in global private assets. This will include significant co-investment into L&G’s range of private assets capabilities over several years, supporting the Group’s ambition in this business.
L&G’s US protection business is expected to generate operating profits of ~$90 million in 2024 ($34 million in 2023). The anticipated 2024 US statutory net assets of the businesses being sold is ~$850 million. The IFRS profit on completion of the transaction is expected to be greater than £1 billion. In the 12 months to 31 December 2024, US protection and 20% of the US PRT business are expected to generate ~£350-400m of operational surplus generation, driven largely by realizing benefits in the back book on writing new US protection business.
“This is a transformative transaction that brings significant strategic and financial benefits to the Group and demonstrates our commitment to deliver on our strategy – sharpening our focus on core businesses, leveraging the synergies between them, and driving sustainable growth to enhance shareholder returns. This strategic partnership brings together two highly complementary global businesses, with a shared ambition for growth, and will enable us to capitalize on the large market opportunities in US Pension Risk Transfer while driving scale and profitability in global asset management. Today’s announcement reflects our commitment to value creation and shareholder returns as we expect to distribute c. 40% of our market cap through dividends and share buybacks over the next three years.” – António Simões, Group Chief Executive Officer of Legal & General.
“We are pleased to announce this landmark transaction, which will accelerate Meiji Yasuda’s international growth strategy – strengthening our position in the US life insurance market, deepening our long-standing partnership with L&G in asset management, and enabling access to the US PRT market, where we will benefit from L&G’s market-leading expertise to unlock sustainable growth together. Our intention to acquire a 5% shareholding in L&G reflects our confidence in their leadership, strategy and long-term prospects.” – Hideki Nagashima, President and Group CEO of Meiji Yasuda Life Insurance Company.
