L&G sells mature savings unit for £650m

Legal & General has agreed to sell its mature savings business to global reinsurer Swiss Re to “accelerate its growth agenda” in other areas.

L&G has sold its Mature Savings business for £650m.
L&G has sold its Mature Savings business for £650m.

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The firm said the sale will affect about 1 million of its customers, primarily on the retail side, who hold traditional insurance-based pensions, savings and investment products.

Its Mature Savings business, which ended the first half of 2017 with £33bn in assets under management, will be incorporated into Swiss Re’s life and pensions unit, ReAssure, which manages closed and non-core in-force portfolios for policyholders.

Last year, Mature Savings generated £105m in operating profit for the firm.

L&G told investors it intends to parlay the disposal into higher growth across its core businesses, including its investment management arm, LGIM, as well as its L&G Retirement, L&G Capital and L&G Insurance businesses.

On the back of the sale, the FTSE 100 life insurer expects to gain up to a 2% increase in its Solvency II coverage ratio and a one-off gain totalling £450m.

Carving out its mature savings business “was a difficult decision”, said Nigel Wilson, L&G’s chief executive officer, not least of all because it has been a part of the UK business for more than 50 years.

“However, we have in Swiss Re a great partner, who will be an excellent steward of the business and its many customers and policyholders,” he added.

“Selling Mature Savings is the right decision for us – another important, measured, step in growing our company and updating our products. It will drive further earnings growth by allowing us to focus on our successful market-leading businesses and to accelerate the scaling up of our growth businesses.”

L&G will receive the cash proceeds from the sale by the start of January 2018 and the formal transfer of the business is expected to be completed by mid-2019, subject to regulatory approval.

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