The new boss of Legal & General has unveiled a major overhaul of the insurance and finance firm, which sees it merge some key divisions and consider the sale of its housebuilding business.
The incoming head of Legal & General, Antonio Simoes, has announced a major overhaul of the finance and insurance firm’s structure.
Simoes, who took over as group chief executive in January, informed shareholders his aim is to mould a “simpler, better-connected L&G”. The company shares, however, saw a drop on Wednesday. Also, the long-standing enterprise said it plans to give back £200million to its shareholders through a share buyback programme.
A part of the forthcoming strategy will see the merging of LGIM, their struggling asset management sector, with L&G Capital, which deals with infrastructure investment. In this corporate reorganisation, Michelle Scrimgeour, boss of LGIM, is set to depart from her position.
Looking forward, the group has new aspirations for its institutional retirement business and aims to expand globally to enhance operating profits. CEO Simoes is looking at steady annual growth rates between 6% to 9% over the next three years for the company’s core operational earnings.
A “potential divestment” of some “non-strategic assets”, including Cala, their homebuilding operation, might be under consideration by its corporate investments team. Last month, Sky News aired that FTSE 100 housing giant Persimmon was thought to be contemplating a £1billion bid for Cala.
Mr Simoes said: “Over the last five months we have rigorously reviewed our business, listening to investors, customers, partners and employees. This work has deepened my belief in our strong foundations and excellent potential.”
“L&G is in prime position to respond to and benefit from major structural and societal changes. 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.”
Russ Mould, AJ Bell’s investment director, said: “The new chief executive of Legal & General will likely be stung by the market reaction to his new strategic plan. Investors are blowing raspberries at the proposals for a sweeping overhaul of the business.”
Shares dropped 4.4% in early trading.