Insurance Curator LONDON – British insurance giants Aviva PLC and Legal & General Group PLC (L&G) signaled a robust period for the UK life insurance sector on Tuesday, as Aviva announced it has met key medium-term financial targets ahead of schedule while L&G solidified its position as a premier income stock with an 8.25% dividend yield.
The results highlight a divergence in corporate strategy between the two FTSE 100 mainstays: Aviva has focused on aggressive operational efficiency and capital growth, while L&G continues to leverage its dominant position in the pension risk transfer (PRT) market to prioritize shareholder payouts.
Aviva confirmed it has surpassed its 2026 operating profit target of £2 billion a full year early, driven by strong performances in its capital-light businesses, including general insurance and workplace pensions. The company also noted it has exceeded its £750 million cost-reduction goal, achieving the milestone through digital transformation and the streamlining of its UK and Canadian operations.
"Our performance in 2025 has been characterized by consistent execution and significant capital generation," said Amanda Blanc, Group Chief Executive Officer of Aviva. "By hitting our financial milestones early, we are positioned to offer further returns to our shareholders while continuing to invest in the growth of our UK and international franchises."
Following the announcement, Aviva’s board approved an upgraded dividend guidance, projecting mid-single-digit growth in the total dividend per share.
While Aviva focused on target acceleration, Legal & General remained the FTSE 100’s leader in yield. At 8.25%, L&G’s dividend yield remains one of the highest in the blue-chip index, supported by a solvency II coverage ratio that analysts estimate at over 220%.
Under the leadership of CEO António Simões, who took the helm in early 2024, L&G has undergone a structural reorganization to simplify its business units. The firm’s "Institutional Retirement" division remains the primary engine of growth, benefiting from a surge in UK defined-benefit pension schemes seeking to offload liabilities through bulk annuity deals.
"We are seeing unprecedented demand in the PRT market as higher interest rates improve the funding status of pension schemes," Simões said in a recent investor update. "Our focus remains on disciplined capital allocation, ensuring that we maintain our status as a reliable income provider for our institutional and retail investors alike."
Market analysts noted that the high yields offered by the insurance sector are attracting significant capital as inflation begins to stabilize across the UK.
"The UK life insurance sector has transitioned from a period of restructuring to one of significant capital return," said Marcus Wright, a senior equity analyst at City Research. "Aviva’s ability to hit targets early suggests operational leverage is kicking in, while L&G’s yield remains the gold standard for income-seeking portfolios in a volatile market."
Despite the positive momentum, both firms face ongoing regulatory scrutiny from the Financial Conduct Authority (FCA) regarding "Consumer Duty" standards and the pricing of legacy products. Additionally, both companies noted that while higher interest rates have generally benefited solvency ratios, they continue to monitor the impact of commercial real estate valuations on their investment portfolios.
As of Tuesday's closing bell, Aviva shares were trading up 1.4% at 485p, while Legal & General shares held steady at 248p.