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Legal & General shares to steady following Boots pension deal – broker  

Published 27/11/2023, 10:57
© Reuters. Legal & General shares to steady following Boots pension deal – broker  

Proactive Investors - Legal & General Group PLC (LON:LGEN) is not expected to see much share price movement from purchasing Boots’ pension scheme despite it being the largest transaction in the insurer's history.

Analysts at UBS believe the new business strain caused by the high volumes of the £4.8 billion deal will be offset by lower solvency ratios.

An additional £910 million is set to be added to L&G’s contractual service margin - the future profits earned from the deal – slightly lower than UBS’s predictions of £1.3 billion.

Experts noted this figure doesn’t include any contribution from any non-annuity business such as protection.

The Boots deal brings the firm’s pension risk transfer (PRT) volumes to £13.4 billion for 2023, compared to UBS predictions of £12.8 billion and Visible Alpha’s market consensus of £12.1 billion.

However, when funded reinsurance is included, the net premiums of the deal come in at £10.2 billion.

Solvency ratios are at 224%, according to L&G. Analysts at UBS had estimated this figure would be at 227%, while market consensus had placed the firm at 230%.

Legal and General is trading flat on Monday, having opened at 229p.

Read more on Proactive Investors UK

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