Legal & General (L&G) has put its housebuilding firm, Cala, up for sale as the firm looks to change its business focus.

The insurance company has said that it plans to double down on its corporate pension deals, aiming to complete between £50bn and £65bn of defined benefit deals by the end of 2024, which is up from a previous target of between £40bn and £50bn.

Furthermore, the group is looking to create a signal asset management division, by bringing together L&G Investment Management and L&G Capital, with the aim of creating revenue of between £100m-150m between 2025 and 2028.

L&G Group chief executive officer, António Simões, 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. Changing demographics, climate transition, economic uncertainty and technology are driving demand for trusted, experienced investors that can manage risk through the cycle, originate productive assets, and deliver returns for savers.

"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.

"By seizing the opportunity in institutional retirement while investing to scale and deepen our capabilities in asset management and retail, we will evolve our business to better address society's changing investment needs, and shift towards fee-based earnings at higher returns on capital. We will make the most of our international business opportunities, with a particular focus on the US."

The firm has also set out plans for a £200m share buyback for 2024 in order to increase returns for shareholders.

As part of these plans, L&G said that it targets a 6-9% of core operating EPS between 2024 and 2027 at an operating return on equity of over 20%.

However, analysts have pointed out that even with the share buyback, investors may not be impressed with the decisions moving forward.

Investment director at AJ Bell, Russ Mould, added: "Investors are blowing raspberries at the proposals for a sweeping overhaul of the business as L&G confirmed it would combine some divisions and sell off the Cala housebuilder division which many casual followers may not have realised formed part of the business.

"Even the addition of a £200m buyback isn’t enough to get shareholders on side. Targets to grow earnings at between 6% and 9% out to 2027 seem reasonably ambitious but there is perhaps some scepticism around its ability to achieve this goal.

"A key driver for growth is expected to be aggressive expansion into the market for corporate pensions deals – where companies pay L&G to take on the liabilities associated with their schemes.

"Globally, the company did £13.7bn of these deals in 2023 so aiming to complete £65bn worth just in the UK by the end of 2028 seems a stretch. The company also hopes to do more business in the US – though this can be a tough market to crack. There may be some disappointment that the dividend is only set to increase 2% per year longer-term after a 5% uplift in 2025."

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