When Legal & General Group PLC (LSE:LGEN) reports its final results on 12 March the size of its share buyback could surprise, reckons UBS.
The FTSE 100 life insurer buyback should be around £500 million, analysts at the Swiss bank have predicted, which is well above some City predictions for around £300 million and a City consensus of around £380 million.
L&G's sale of its Cala Homes arm will have freed up some capital, as will December's institutional retirement update, which pointed to a need for less capital to fund future pension transfer (PRT) deals.
A £200 million "regular" buyback is likely to be topped up by £100 million from Cala sale plus another £200 million from the capital-light PRT, said UBS.
There is also potential upside to the consensus forecast for L&G's Solvency II ratio, which stands at 221% but UBS sees it nearer 235%, driven by higher interest rates and one-off benefits from the Solvency II Matching Adjustment reforms.
Results are also likely to see discussion on L&G's announced disposal of its US protection business to Meiji Yasuda, with UBS seeing the deal "as positive from a cash and earnings perspective".
Management could also potentially upgrade operational surplus generation guidance at the results, given the transaction accelerated capital generation by £1.2 billion from the business.