TLDR
- Legal & General (LGEN) fell ~6% on Wednesday after missing key analyst forecasts
- Core operating profit rose 6% to £1.62 billion, but came in slightly below estimates
- Solvency II ratio dropped to 210% from 232%, missing forecasts
- L&G launched its largest-ever share buyback of £1.2 billion
- Total planned shareholder returns of £2.4 billion over the next year
Legal & General posted a 6% rise in annual core profit for 2025, but the market wasn’t impressed. The stock dropped sharply as analysts pointed to missed forecasts and a weaker solvency position.
Legal & General Group Plc, LGEN.L
Core operating profit came in at £1.62 billion. That was slightly below what analysts had expected. Profit before tax jumped 143% to £807 million — but that was well short of the roughly £1.19 billion consensus estimate.
Core earnings per share rose 9% to 20.93p, hitting the top end of L&G’s own 6–9% guidance range. The company said that was a positive sign for the direction of the business.
Still, investors sold off the stock. By mid-morning in London, LGEN was down around 5.7% to 243.8p — on track for its worst single day in 11 months.
The Solvency II coverage ratio was the other sticking point. It came in at 210%, down from 232% the year before. That missed analyst expectations too, and it’s a number the market watches closely as a measure of financial strength.
CEO António Simões pushed back on the concern. He said the company was “very comfortable” with its capital position and pointed to the £1.2 billion share buyback — the largest in L&G’s history — as a sign of confidence.
“In two years, we’ve reshaped the company,” Simões told Reuters. He described L&G as “a sharper, more focused business” following a period of restructuring.
Shareholder Returns and Business Performance
Total planned returns to investors stand at £2.4 billion over the next 12 months, with more than £5 billion targeted between 2025 and 2027. Dividend per share growth is guided at 2%.
The pension risk transfer division had a strong year. L&G wrote £11.8 billion of global bulk annuity business, with £10.4 billion of that in the UK. Workplace defined-contribution assets under administration grew 21% to £114 billion.
Asset management showed improvement too. Private markets assets rose 32% to £75 billion, and average fee margins expanded to 9.1 basis points.
Analyst Andreas Van Embden at Peel Hunt called it a “solid set of results, broadly in line with estimates at the operating level,” but flagged a 4% miss in net asset value due to investment variances.
Abid Hussain at Panmure Liberum said the numbers “look fine year-on-year but appear to have generally missed or be in line with expectations.”
Monitoring the Iran War
L&G, which manages £1.1 trillion in assets, is keeping a close eye on market conditions. Simões said the company is monitoring the potential market impact of the expanding U.S.-Israeli war on Iran, which has pushed oil prices higher and raised concerns about the global economic outlook.
L&G is also a major holder of UK government debt, where yields have risen. Simões said wider credit spreads actually benefit the company’s results. “So we’re monitoring the impact very closely, but we’re pretty confident,” he said.
The company also flagged stresses in the U.S. private credit market as something on its radar. L&G struck a partnership with Blackstone in U.S. private credit last year, and Simões said its approach to high-quality credit has not changed.
Guidance for 2026 is for core operating EPS growth to remain at the top end of the 6–9% range, with healthy bulk annuity volumes expected to continue.
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