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Investing.com -- Legal & General (LON:LGEN) shares fell more than 1% on Tuesday after the company presented its growth strategy for its Asset Management division and reaffirmed financial targets through 2028.
The company said global demand for retirement solutions continues to grow, citing its leadership in the U.K. Defined Benefit and Defined Contribution sectors and its position as the U.K.’s largest asset manager with growing international operations.
The company’s balance sheet, totaling £98bn at the end of fiscal 2024, includes £92bn in annuity portfolio assets, £5bn in shareholder assets, and £1.2bn in Asset Management balance sheet investments.
Legal & General said this capital will support the growth of new strategies and increase fee-related earnings.
Asset Management supports Defined Benefit schemes moving toward Pension Risk Transfer. The company said clients retained after buyouts generate fees three times higher.
Its Retail Workplace Savings business provides a steady stream of new assets, with additional growth potential as the Defined Contribution market matures.
Legal & General maintained its 2028 financial targets, projecting operating profit of £500-600m, reflecting a 6-10% compound annual growth rate from 2024 to 2028.
Fee earnings are expected to grow at 9-15% annually during the same period. The company aims to have 70-75% of Asset Management earnings fee-related by 2028, with a cost-income ratio below 70%.
The group forecasts cumulative additional net new revenue of £100-150m between 2025 and 2028, focusing on higher revenue margins and high-growth client segments.
Flows from Workplace Defined Contribution and annuity businesses are expected to provide more than half of new revenues, offsetting the structural decline of the U.K. Defined Benefit schemes.
The average fee margin is expected to reach double digits by 2028, up from 8 basis points in fiscal 2024.
Private Markets assets under management are projected to exceed £85bn by 2028, up from £57bn in fiscal 2024 and £48bn in fiscal 2023.
Legal & General said it started 2025 in line with its three-year targets and expects group core operating earnings per share to grow 6-9% in 2025.