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Legal & General exits with-profits after fifty years through £650mln sale to Swiss Re

The group’s portfolio of £33bn mature saving policies has been sold to Swiss Re for £650m
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End of an era for L&G

Legal & General Group Plc (LON:LGEN) has cut ties with with-profits policies that have been the bedrock of its business for fifty years.

The group’s portfolio of £33bn mature saving policies has been sold to Swiss Re for £650m, a decision Nigel Wilson chief executive said was hard but necessary.

READ: Insurers L&G and the Pru feel the love from Citigroup

"This was a difficult decision as with-profits savings has been a part of Legal & General's UK business for over 50 years.

L&G added the business being sold comprise mainly retail customers with traditional insurance based pensions, savings and investment products. 

Assets include both unit-linked business and Legal & General's £21.4bn with-profits fund.

Legal & General presence in these areas will through workplace pensions, where it has 2.5mln customers, intermediated retail savings and ISAs and Unit Trusts sold directly to customers.

L&G expects to receive the £650mln proceeds at the start of 2018, with the formal completion in mid-2019.

READ: Legal & General's first-half profits supported by retirement business but shares fall

The transaction is expected to boost L&G’s solvency by 2% and result in a one-off profits of £450mln.

The Mature Savings business generated £105mln operating profit last year., but Wilson said the sale would allow it to boost earnings by focusing on its market-leading businesses and to accelerate the scaling up of our growth businesses.

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The group manages £7.8bn of funds: £2.8bn in the UK; £2.9bn in Sweden; and £2.1bn in the Netherlands.

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