New Legal & General chief reveals plans for sweeping overhaul

The new boss of Legal & General has unveiled a major overhaul of the insurance and finance firm, which sees it merge some key divisions and consider the sale of its housebuilding business.

Antonio Simoes, who took over as group chief executive from Sir Nigel Wilson in January, told shareholders he is looking to create a “simpler, better-connected L&G”.

Nevertheless, shares in the company dropped in value on Wednesday morning.

The historic company also revealed it would hand £200 million back to shareholders through a share buyback programme.

As part of the new strategy, the company said it will merge LGIM, its underperforming asset management arm, with L&G Capital, which is focused on infrastructure investment.

It added that LGIM boss Michelle Scrimgeour will step down from her role amid the corporate restructure.

L&G also set new targets for its institutional retirement operation, with plans to grow the business internationally to help improve its operating profits.

As a whole, L&G’s new boss said he is hoping to secure compound annual grow of between 6% and 9% for its core operating earnings for the next three years.

The firm said it corporate investments unit will look at the “potential divestment” of some “non-strategic assets” at the business, including its Cala homebuilding operation.

Last month, Sky News reported that FTSE 100 housing giant Persimmon was considering a roughly £1 billion bid for Cala.

Mr Simoes said: “Over the last five months we have rigorously reviewed our business, listening to investors, customers, partners and employees.

“This work has deepened my belief in our strong foundations and excellent potential.

“L&G is in prime position to respond to and benefit from major structural and societal changes.

“Our vision is for a growing, simpler, better-connected L&G, focused on three core business divisions, and set apart by our shared sense of purpose and powerful synergies.”

AJ Bell investment director Russ Mould said: “The new chief executive of Legal & General will likely be stung by the market reaction to his new strategic plan.

“Investors are blowing raspberries at the proposals for a sweeping overhaul of the business.”

Shares were down 4.4% in early trading.