Legal & General shares have trailed peers M&G and Aviva sharply over the past five years, yet the group’s FY2025 results, published on 11 March, show an operation generating more cash and profit than the subdued share price suggests.
Over five years, M&G delivered a total return of roughly 137% and Aviva around 224%. Legal & General managed about 70%. The laggard status reflects a mix of macro headwinds, commercial property exposure, and investor rotation toward faster-growing rivals.
For income investors, the gap in capital returns has a counterpart: Legal & General shares carry a 7.5% dividend yield, the highest on the FTSE 100, against yields below 6% at both M&G and Aviva. Yahoo Finance has cited the yield at 8.09% using a more recent market price, reflecting different measurement dates. The shares trade on a forward price-to-earnings ratio of 12.4.
What Legal & General Shares Actually Offer: The FY2025 Numbers
Core operating profit rose 6% to £1,623 million in FY2025, according to the Legal & General FY2025 press release. Core operating earnings per share grew 9%.
IFRS profit before tax came in at £807 million, according to the FY2025 press release and analyst pack. The pro forma Solvency II coverage ratio stood at 210%, providing a substantial buffer above regulatory requirements.
Solvency II Operational Surplus Generation rose 5% to £1,530 million (FY2024: £1,461 million), with OSG per share up 8% to 26.78p. The contractual service margin, the group’s store of future profit locked into existing insurance contracts, stood at £12.4 billion, up 2%, within a total future-profit store of £13.3 billion.
The dividend per share grew to 21.79p. The company also announced a £1.2 billion share buyback, the largest in its history. Combined with 2% guided dividend per share growth, the group’s own FY2025 presentation slides characterise the package as an all-in yield of 17% at the current price.
Growth Engines and Portfolio Reshaping
The Institutional Retirement division wrote £11.8 billion of global pension risk transfer in FY2025, up from £10.3 billion in FY2024, with £10.4 billion placed in the UK market alone, according to the analyst pack. Pension risk transfer is a structural growth market as UK corporate defined-benefit schemes mature and seek insured solutions.
Workplace defined-contribution assets under administration grew 21% to £114 billion, with net flows of £6.2 billion and a further £3.7 billion of assets already won and due to onboard in 2026, according to the FY2025 press release.
Asset Management reported global AUM of £1.2 trillion. Within that, Private Markets AUM rose 32% to £75 billion, while annualised net new revenue reached £34 million with average fee margin expansion to 9.1 basis points, according to the analyst pack.
On portfolio reshaping, the group completed the sale of its US Protection business and grew its Meiji Yasuda partnership. Meiji Yasuda now holds a 5% stake in Legal & General. The Corporate Investments Unit has completed cumulative disposals of £1.5 billion of assets, according to the FY2025 results presentation slides.
The operational picture is one of steady compounding: rising surplus generation, a growing future-profit store, and accelerating flows in both institutional retirement and workplace savings. The drag on the share price comes from elsewhere.
Investors remain cautious about two specific exposures. Commercial property valuations are sensitive to sustained high interest rates, and Legal & General carries meaningful exposure in its investment portfolio. Separately, the group has benefited from buoyant equity markets partly driven by technology stocks; a sharp market correction would reduce asset valuations and investment income.
The dividend growth rate has also slowed relative to earlier years. The 2% guided increase for the year ahead is modest against the backdrop of 9% EPS growth, though management frames the buyback as the mechanism for returning additional capital above the base dividend commitment. Yahoo Finance notes that EPS growth is expected to land at the top end of the board’s three-year target range of 6% to 9%, according to Yahoo Finance.
Legal & General shares remain priced at a level that prices in continued caution. The capital position is strong, the franchise is growing in both pension risk transfer and workplace savings, and the income return is the highest in the FTSE 100. The near-term binary is property valuations: further deterioration would pressure the investment portfolio; stabilisation removes the main overhang on the price.
