Legal & General’s new chief executive, António Simões, has revealed a comprehensive restructuring of the company. This plan includes a heightened focus on the booming pensions sector and the sale of its housebuilding arm, Cala Homes.

Simões, who took over in January after a career with Santander and HSBC, aims to streamline the business into three divisions, promising a “simpler and better-connected” operation. This strategic shift marks his first major initiative since taking the helm of the £14bn insurance and asset management group.

A key element of the new strategy involves doubling efforts in the corporate pension market. Legal & General, the largest provider of defined contribution pension schemes in the UK, now targets completing between £50bn and £65bn of pension deals by 2028, an increase from the previous goal of £40bn to £50bn. Simões noted that this market, with only 10% of £6.6tn in defined benefit pension assets transferred to insurers, represents a “store of future profit” essential for long-term earnings.

The company will consolidate its asset management operations by merging its alternative asset manager, Legal & General Capital, with its traditional asset manager, Legal & General Investment Management. This will form a new private markets division. Additionally, Legal & General plans to sell off non-core assets, including Cala Homes and legacy properties such as a shopping centre in Bracknell, Berkshire. However, it will continue investing in affordable housing, which Simões calls a “key strategic business.”

Despite omitting the “inclusive capitalism” rhetoric of his predecessor, Nigel Wilson, Simões emphasised that the company’s purpose remains central. He stated, “Institutional retirement, asset management and retail are very much focused on solving societal issues, and I’ve talked about that deep sense of purpose that’s right at the core of L&G.”

Simões reassured employees that the overhaul would not lead to redundancies but would focus on improving efficiency, including reducing the number of cloud providers used. “It’s clearly not about people; it is about us working more effectively together, about growth,” he said.

Legal & General also announced its first share buyback of £200m this year, along with a 5% dividend increase. Further, the company plans 2% annual dividend growth until 2027 and additional share buybacks.

In response to the announcement, Legal & General’s share price dropped over 3% in early trading.