Legal & General CFO Sees Vast Potential for US Life and Retirement Growth
November 21, 2016 by Renée Kiriluk-Hill
LONDON – Legal & General Group will grow its business in the United States by replicating its financial services model in the United Kingdom, Chief Financial Officer Mark Gregory said.
“The potential for this is ginormous,” he said, noting the life and retirement services market in the United States is potentially larger than in the United Kingdom, where Legal & General is based. Legal & General says it has more than 1 million customers in the United States, compared to more than 7 million in its home country.
He spoke at a Deutsche Bank American Depository Receipt Virtual Investor Conference.
Gregory envisions Legal & General competing in the United States with Prudential and MetLife Inc. “We are very comfortable where we are and very keen to grow that business,” he said.
Legal & General Retirement America enacted its first bulk annuities deal in October 2015, for $450 million, and has completed three more since then, said Gregory.
His company’s scale affords great opportunity in what Gregory called a massive defined benefits space — £1.9 trillion (US$2.34 trillion) in future private sector market opportunities in the United Kingdom and $3.1 trillion in the United States.
The core of Legal & General business is asset management, producing operating profits of £712 million in the first half of the year, compared to £230 million from insurance and savings products. He said Legal & General Investment Management is the top non-U.S. asset manager in the world.
According to Gregory, asset management benefits from more inherent efficiency than the insurance and savings segments. Further, life expectancies are rising and overall populations are aging on each continent except Africa.
“The fact is the world getting older is a big driver of our business,” he said. Legal & General retirement assets rose to £51 billion in the first half of 2016, compared to £28 billion in 2011.
In conjunction, he said pension responsibilities must shift away from government. Defined contribution assets in the United Kingdom grew to £50 billion in the first half of the year, compared to £24 billion in 2011.
Legal & General Group posted a 22% increase in after-tax profit to £667 million (US$864 million) in the first six months of 2016. Pretax profit increased by 23% to £826 million (Best’s News Service, Aug. 9, 2016).
Operating entities of Legal & General Group Plc. currently have a Best’s Financial Strength Rating of A+ (Superior).
(By Renée Kiriluk-Hill, associate editor, BestWeek: Renee.Kiriluk-Hill@ambest.com)
