L&G acquisition signals US pensions expansion

A statement issued by the UK insurer on 20 May confirmed that Legal & General Investment Management America negotiated an initial payment of $30.75m (£18.22m) with deferred consideration of $1.5m (£0.89m) payable over two years from the date of completion.

The insurer hopes to break into the US pension market thanks to the deal, which will see LGIMA access a range of target date funds sub-advised by GIA.

L&G’s statement said it had identified the international expansion of L&G Investment Management as core to the group’s growth, saying the acquisition would provide “scale and distribution” in the US defined contribution pension market, estimated to be worth $6trn (£3.56trn).

Article continues after advert

Analysts have been relaxed about the possible implications of more liberal income drawdown rules for the insurer’s UK balance sheet.

Alan Devlin, European insurance analyst at Barclays, said bulk purchase annuity deals could comfortably offset a potential drop in annuity sales.

He said: “The bulk purchase annuity market is a major opportunity for L&G, and the company had already been shifting towards this.”