Analysts at Deutsche Bank continue to see Legal & General as a ‘hold,’ pointing to the group’s shift away from ‘safer’ businesses. In a separate development, the FTSE 100 insurer has unveiled an investment in a project to expand one of the University of California’s campuses.
Legal & General’s share price shed 0.52 percent to close at 210.60p yesterday, largely in line with losses in the broader London market, with the benchmark FTSE 100 index ending the session 0.50 percent lower at 6,859.15 points. The group’s shares have lost over a fifth of their value over the past year, as compared with about a 4.7-percent rise in the Footsie.
Deutsche Bank reiterated its ‘hold’ rating on Legal & General yesterday, with a price target of 225p on the shares, amid concerns that the group’s growth is coming mainly from its more capital-intensive annuities business and its Legal & General Capital (LGC) arm, which invests to match its annuity liabilities.
“Legal & General’s latest results show a marked shift in the mix away from ‘safer’ capital-light businesses towards annuities and LGC,” the bank’s analyst Oliver Steel commented, as quoted by Citywire, adding that Deutsche Bank was “disconcerted to see an almost 30-percent drop in the UK protection result, which up to now has been a stalwart of the group’s growth”.
In other Legal & General news, the company announced yesterday in a statement that it had agreed a deal to provide about $100 million in a 38-year facility, as part of a total $660 million investment with other lenders, to the University of California, which plans to double the size of its campus in Merced County to accommodate up to 10,000 students. The deal marks the FTSE 100 group’s first foray into infrastructure deals in America.
“We have built up a strong track record in this space and continue to target transactions backed by economic and social infrastructure as part of Legal & General’s wider approach to real estate investments,” Charles-Henry Lecointe, senior investment manager at L&G’s LGIM Assets unit, commented, as quoted by The Times.