Legal & General (L&G), one of the UK’s leading insurers, reported a 6% rise in core operating profit for the first half of 2025, driven primarily by the booming pension risk transfer (PRT) market in the United Kingdom.
According to Chief Executive António Simões, profits rose to £859 million by the end of June, reflecting L&G’s dominant role in the PRT sector — a market in which companies pay insurers to assume their pension obligations. “This growth underlines the appeal and resilience of the UK’s retirement income sector,” Simões told the Financial Times.
L&G’s new PRT business more than doubled in value, reaching £3.4 billion, compared to £1.5 billion during the same period last year. The company also disclosed a strong forward pipeline, with an additional £1.7 billion in pension risk transfers secured since July.
Rising Competition
L&G’s strong performance comes amid increasing competition from North American private capital giants. In recent months, Brookfield (Canada) and Apollo-backed Athora (Europe) have made significant moves into the UK retirement market:
- Brookfield’s insurance arm announced a £2.4 billion acquisition of Just Group.
- Athora revealed a £5.7 billion takeover of Pension Insurance Corporation.
Despite the rising interest from large foreign investors, Simões expressed confidence in L&G’s market leadership, noting that the company’s recently announced strategic partnership with Blackstone provides “additional firepower.” He added, “It’s flattering to have sophisticated investors entering a market where we already lead.”
Diversification and Private Market Growth
While L&G’s asset management arm — the largest in the UK — experienced net outflows of £5 billion, this marked a significant improvement from £31.3 billion in outflows during the same period last year.
Simões also emphasized the company’s expanding presence in private markets. The partnership with Blackstone could potentially unlock $20 billion in investments, primarily in US private credit and infrastructure sectors. Earlier this year, L&G acquired a majority stake in Proprium Capital Partners, a $3.5 billion private equity firm, to bolster its real estate investment operations across Europe and Asia.
However, Simões acknowledged challenges in the private credit space, citing inflated asset valuations as a reason for exercising caution. “You haven’t seen me buy anything in private credit because, to be honest, the valuations are too high,” he remarked.
Mixed Investor Reactions
While core operating profits exceeded analysts’ forecasts, L&G’s corporate investment division underperformed, according to Bank of America analysts. The company’s share price dropped by 2.5% following the earnings announcement.
Despite this, Jefferies analyst Philip Kett noted that L&G’s results were solid, although he cautioned that the company had “benefited from a relatively undemanding consensus” among market expectations.
Summary:
- Profit rise: £859 million core operating profit (+6%)
- PRT growth: £3.4 billion new business (+127%)
- Private capital rivals: Brookfield and Athora make major UK acquisitions
- Blackstone partnership: Potential $20 billion in private credit and infrastructure
- Asset management: Net outflows down to £5 billion
- Share reaction: L&G shares fell 2.5%
Legal & General continues to adapt to a dynamic pensions landscape, reinforcing its position through strategic partnerships, diversification, and a cautious approach to market valuation.
