Legal & General (L&G) will create a single asset management division, bringing together Legal & General Investment Management (LGIM) and Legal & General Capital (LGC) as a unified, global, public and private asset manager.
LGIM is the group’s global asset management division, while LGC is L&G’s alternative assets platform.
The group announced this morning that it was “committed to driving growth in public markets, creating a scalable global operating platform, driving margin expansion through operating leverage and increasing average revenue margin”.
As a result, Michelle Scrimgeour has announced her intention to step down from the role of LGIM’s chief executive officer.
The group has begun a global search for a CEO to lead the growth of the combined asset management division.
Scrimgeour and her executive team set out their strategic growth priorities in November 2020, a little more than a year after she had taken over as CEO of LGIM. Back then, she and her team agreed to grow the business by focusing on existing strengths: to modernise, diversify and to internationalise.
Following the group’s refreshed strategy, Scrimgeour will continue as CEO of the legal entity – LGIM (Holdings) Limited – until a new appointment is made, and will lead the transition and establishment of the new division with Laura Mason, who has been appointed CEO of private markets. Both will report to the group CEO, António Simões.
By 2028 L&G expects to deliver an operating profit of £500-600m, achieve cumulative annualised net new revenues of £100-150m (2025-2028); and grow its private markets platform AUM to £85bn (£48bn at FY23).
Simões said: “L&G is in prime position to respond to and benefit from major structural and societal changes. Changing demographics, climate transition, economic uncertainty and technology are driving demand for trusted, experienced investors that can manage risk through the cycle, originate productive assets, and deliver returns for savers.
“Our vision is for a growing, simpler, better-connected L&G, focused on three core business divisions, and set apart by our shared sense of purpose and powerful synergies.”
L&G plans to “materially scale” its in-house and origination platform capability in private markets, significantly expanding its capabilities and client offerings across real estate, private credit and infrastructure, including through an accelerated programme of fund launches.
Institutional retirement
Additionally, stemming from this group restructuring, L&G is also focusing on institutional retirement. It plans to grow pension risk transfer (PRT) volumes, writing £50-65bn in the UK by year-end 2028, increasing store of future profit and generating permanent capital to catalyse asset management growth, it announced.
The group is well placed to “seize the significant institutional retirement opportunity, both in the UK and internationally”, it said, noting that only 10% of the approximately £6.6trn of defined benefit pension assets in the UK, the US, Canada and the Netherlands have so far transferred to insurers.
L&G said that in the UK volumes are expected to average £45bn per annum over the next decade, up from around £25bn per annum since 2018.
“Internationally, we have an established position in the US and are growing in Canada and exploring our partner model in the Netherlands. We will continue to pursue a disciplined approach to profitable growth in these markets,” the firm stated.
By 2028 L&G expects to have grown its institutional retirement operating profits at 5-7% of compound annual growth rate (2023-2028), and to write £50-65bn of UK PRT at a capital strain of less than 4% (2024-2028).
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