By Amy-Jo Crowley, Iain Withers and Yadarisa Shabong
LONDON (Reuters) -Legal & General said on Friday it would sell its U.S. protection business to Japan’s Meiji Yasuda for $2.3 billion in cash and said the Japanese firm would take a 5% stake in the British insurer, in the biggest strategic move so far under CEO António Simões.
The group’s shares gained 8% in early trading. They have broadly been trending lower in recent years, but have risen around 12% year to date, outperforming the broader London and European stock markets.
Simoes told reporters the transaction was the largest in the company’s history, adding it was part of his wider strategy announced last year to simplify the group, and would be followed by further, likely smaller disposals.
The companies will also form a strategic partnership, with Meiji Yasuda taking a 20% stake in L&G’s U.S. pension risk transfer (PRT) business, a fast-expanding market globally as companies offload their pension schemes to insurers.
L&G said it planned to launch a share buyback programme worth an extra 1 billion pounds ($1.2 billion) after the sale.
Simoes described Meiji Yasuda taking a stake in the group as a “vote of confidence” and said it did not indicate a desire for deeper integration in future.
The transaction on the U.S. protection unit, which is subject to regulatory approval, is expected to complete by the end of 2025.
“This strategic partnership brings together two highly complementary global businesses, with a shared ambition for growth,” he added in a statement.
L&G said it would help the companies capitalise on opportunities in the U.S. market and in global asset management.
After the sale of the U.S. protection business closes, L&G will only serve retail customers in its home market of Britain, which Simoes said L&G remained committed to.
The company said it would use 400 million pounds of the proceeds from the transaction to fund the expansion of the U.S. pension risk transfer business.
L&G sold its UK housebuilder CALA Group in a deal worth 1.35 billion pounds last September to an acquisition vehicle led by U.S. private asset firm Sixth Street Partners.
It also promoted Laura Mason to lead its retail division and hired Katie Worgan from Lloyds Banking Group to become group chief operating officer.
($1 = 0.8046 pounds)
(Reporting by Yadarisa Shabong in Bengaluru, Amy-Jo Crowley and Iain Withers in London; Editing by Sherry Jacob-Phillips and Emelia Sithole-Matarise)
