Legal & General
Legal & General allocates capital like an oak grows branches: £1.616B profit, £1.1T AUM, returning 40% of market cap to shareholders 2025-2027.
Legal & General operates at the intersection of longevity risk and capital markets, executing portfolio optimization that most financial services firms struggle to replicate. Core operating profit grew 6% to £1.616 billion in 2024, with Asset Management reaching £1.1 trillion in global AUM. The company wrote £10.7 billion in Pension Risk Transfer business across 56 deals in 2024, including four deals exceeding £1 billion each. This is resource allocation refined to art: match long-duration liabilities (pension obligations that pay out over decades) with long-duration assets (infrastructure, real estate, private debt) and capture margin on the spread.
The strategic shift demonstrates apical dominance in portfolio construction. L&G sold Cala (housebuilder) and US Protection while announcing a strategic partnership with Meiji Yasuda and investing in Taurus. The company is pruning non-core businesses to concentrate capital in three growth engines: Institutional Retirement, Asset Management, and UK Retail. Asset Management pivoted toward higher fee-margin products, increasing average fee rate from 7 basis points to 8 basis points. This mirrors how organisms invest in high-return tissues while shedding metabolically expensive structures that provide little fitness advantage.
What separates L&G from insurance peers is execution speed on shareholder returns. The company announced plans to return approximately 40% of market capitalization to shareholders over 2025-2027 through dividends and buybacks. Full-year dividend per share increased 5% to 21.36 pence, with a £500 million buyback for 2025. Private Markets AUM hit £65 billion, Workplace flows reached £4 billion (up 21%), and the company secured partnerships with Blackstone and acquired Proprium Capital Partners. The biological principle: organisms that can rapidly reallocate resources to highest-return opportunities (private markets, workplace pensions) while divesting lower-return activities (housebuilding, US insurance) outcompete those maintaining legacy portfolios for inertia's sake.