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Legal & General shares soar as º£½ÇÊÓÆµ insurer sells US life business for £1.8bn

Shares in Legal & General soared after the firm announced the sale of its US insurance business to Japanese firm Meiji Yasuda for £1.8bn

Legal & General headquarters office in the City of London(Image: Tim Ireland/PA Wire)

Shares in Legal & General (L&G) surged following the announcement of its US insurance business's sale to Japanese company Meiji Yasuda for £1.8bn.

As a result of the transaction, Meiji Yasuda will acquire L&G’s US protection business and hold a 20% economic interest in its pension risk transfer (PRT) business, as reported by .

The FTSE 100 firm will retain 80% of existing and new PRT through reinsurance arrangements, with PRT involving the purchase of pension liabilities from corporate pension schemes.

L&G stated that the £1.8bn valuation offers a "compelling multiple" to projected 2024 earnings.

The protection business is forecasted to yield operating profits of approximately $90m in 2024, while its expected net assets are around $850m.

Of the proceeds, £400m will be reinvested in the PRT business, while £1bn will be returned to shareholders.

"This would be incremental to the group’s existing distribution policy. L&G therefore expects to return the equivalent of c. 40 per cent of its market cap to shareholders over 2025-2027 through a combination of dividends and buybacks," it said.

The remaining £400m will be redeployed in accordance with the strategy announced last summer.