Legal & General Group PLC (LSE:LGEN) is set to return 40% of its market capitalisation to shareholders over the next three years, according to UBS.
The investment bank maintains its 'buy' rating on the stock, citing strong capital returns despite headwinds to earnings.
UBS expects increased share buybacks, raising its 2026-27 forecast to £250 million per year, up from £200 million.
It also highlights L&G’s shift towards a capital-light pension risk transfer (PRT) business, which brings in more cash upfront but slightly lowers long-term profits.
The company is also working on selling its £800 million in corporate investments, which could free up £100-150 million for shareholder returns.
Meanwhile, L&G’s asset management arm is expected to improve margins, tracking towards the upper range of its £500-600 million earnings target by 2028.
Despite a 72% drop in 2024 earnings due to market fluctuations, UBS does not see capital constraints. It maintains a price target of 270p, reflecting 12% upside from the current share price.