Legal & General Group ( LGGNF ) has agreed to sell its US insurance entity, comprising its US protection and US Pension Risk Transfer businesses, to long-term partner Meiji Yasuda for an equity value of 1.8 billion British pounds ($2.3 billion) payable in cash at completion.

Following completion, the Japanese mutual life insurance company will own L&G’s US protection business and have a 20% economic interest in its US PRT business. L&G will retain 80% of existing and new PRT through reinsurance arrangements.

As part of the deal, Meiji Yasuda plans to acquire approximately 5% of L&G Group’s shares and expand collaboration in asset management. Following completion, L&G intends to execute an additional 1 billion British pound share buyback, contributing to its goal of returning approximately 40% of its market capitalization to shareholders between 2025 and 2027.

L&G will allocate 400 million British pounds to fund the US PRT reinsurance arrangement, with the remaining proceeds used for strategic investments. The deal is expected to increase L&G’s Solvency II ratio by 22% at completion and 7% post-buyback.

The sale aligns with L&G’s long-term growth strategy, enhancing its US PRT and global asset management businesses while reinforcing its core areas—Asset Management, Institutional Retirement, and UK Retail.

L&G maintains its 2024 guidance for mid-single-digit core operating profit growth and remains on track to achieve a 6-9% EPS CAGR (2024-2027) and>20% Return on Equity (2025-2027).

The sale is projected to generate over 1 billion British pounds in IFRS profit, with anticipated 2024 US statutory net assets of the businesses being sold at $850 million.

“Today’s announcement reflects our commitment to value creation and shareholder returns as we expect to distribute c. 40% of our market cap through dividends and share buybacks over the next three years,” commented António Simões, Group Chief Executive Officer of Legal & General ( LGGNF ).

This agreement marks a significant step in L&G’s strategic expansion and shareholder value creation, reinforcing its global presence and capital strength.

Price Action: LGGNY shares traded higher by 2.04% at $15.47 at last check Friday.