L&G to sell US protection business to Meiji Yasuda for $2.3bn

(Sharecast News) - Legal & General is to sell its US protection business to Japanese peer Meiji Yasuda in a $2.3bn deal that will see the latter take a 5% stake in UK financial services group. L&G's chief executive António Simões called it a "transformative transaction" that will bring both significant strategic and financial benefits to the company.

Through the deal, Meiji Yasuda will own L&G's US protection business and take a 20% economic interest in its US Pension Risk Transfer (PRT) unit, with L&G retaining 80% of existing and new PRT through reinsurance arrangements.

The transaction will also kickstart a long-term strategic partnership between the two to support L&G's growth ambitions in US PRT and asset management.

Following completion, which is expected towards the end of 2025, £400m of proceeds from the deal will be used to fund the US PRT reinsurance arrangements, £1.0bn will be used for a new share buyback programme, while the remainder will be retained and invested, L&G said.

The additional repurchase of shares means L&G expects to return the equivalent of 40% of its market cap to shareholders over 2025-2027 through a combination of dividends and buybacks.

"This strategic partnership brings together two highly complementary global businesses, with a shared ambition for growth, and will enable us to capitalise on the large market opportunities in US Pension Risk Transfer while driving scale and profitability in global asset management," Simões said.