Legal & General Shares Decline Despite Strong 2025 Results

Legal & General (LON: LGEN) shares experienced a 5% decline despite reporting a strong financial performance for 2025, accompanied by a significant £1.2 billion share buyback program.

This decline reflects market apprehension, potentially stemming from broader economic uncertainties or sector-specific concerns, overshadowing the company’s positive results.

The company reported a 9% increase in core earnings per share (EPS) and highlighted substantial strategic progress. Core operating profit rose by 6% to £1,623 million, while IFRS profit before tax reached £807 million.

The Solvency II capital generation (OSG) increased by 5% to £1.5 billion, translating to an 8% increase in SII OSG per share, reaching 26.78p. The pro forma Solvency II coverage ratio stands at a comfortable 210%.

Legal & General is rewarding shareholders with a dividend per share of 21.79p, reflecting a 2% increase. The new £1.2 billion buyback, the largest in the company’s history, along with the dividend growth, commits £2.4 billion to shareholders over the next year. The company has committed to returning over £5 billion to shareholders between 2025 and 2027.

The firm’s store of future profit remains robust at £13.3 billion, supported by a contractual service margin (CSM) of £12.4 billion, up 2%. Its Institutional Retirement division secured £11.8 billion in global pension risk transfer (PRT) deals, with £10.4 billion originating from the UK.

Asset Management saw expansion with £1.2 trillion in global assets under management (AUM), including £75 billion in Private Markets (up 32%), and an annual net revenue rate (ANNR) of £34 million, with average fee margin expansion to 9.1bps.

Retail annuities volumes reached £1.8 billion, and Workplace defined contribution (DC) AUA increased by 21% to £114 billion, with net flows of £6.2 billion, and a further £3.7 billion of assets won to onboard in 2026.

A synergistic business model underpins Legal & General’s performance. The Annuities and Workplace successes drive Asset Management ANNR. Approximately 80% of UK PRT volumes were transacted with long-standing clients in Asset Management. There was a 15% increase in Workplace members taking out an L&G annuity, creating a growing channel for the business.

CEO António Simões highlighted the company’s progress: “Today we’re reporting a strong financial performance for 2025, and meaningful progress in reshaping L&G. We have addressed legacy complexities, strengthened our foundations and we are driving forward our growth strategy across our core businesses.

“This week we will begin a £1.2bn share buyback – the largest in our history – which, together with guided dividend per share growth of 2% this year, will bring planned returns to shareholders to £2.4bn over the next year.”