Legal & Public Chief Executive Sir Nigel Wilson is furious at the “constant” move away from the London equity market as companies opt to list elsewhere.
He said the UK was being held back by a low-growth economy and “political strife”, which had led building materials group CRH to move its listing from London to New York.
“We have to worry about this. We have been in constant drift,” he said. “There’s a City drift to Europe, there’s a City drift to the United States,” Wilson told the Financial Times.
Wilson, who announced in January that he was stepping down after a decade in the job, identified financial planning and regulation as areas where reform was needed.
“We are making the point that Britain is a low productivity, low growth, low wage economy that is riddled with political infighting and that needs to change,” he said. “We need a big step forward for investment in the UK.”
As the group announced its full-year results, Wilson also highlighted the shift of UK pension funds from equities to bonds, over decades, as the main driver away from London.
“If I go back 20 odd years, [our defined benefit pension funds] will be more than 50 percent invested in equity, now they are like 6 percent,” he said. Defined contribution pension schemes should invest more deeply in growth equity, he urged.
In his view, that means less money going to fast-growing companies that could be listed in the UK. L&G invests in 600 start-ups in its portfolio. “We want to expand a lot and we want to be a FTSE constituency next year,” he said. “This is what needs to happen in England.”
Companies that choose Britain will set up their headquarters here, use legal counsel and professionals, he added, but have other options. “Everybody has a choice to make.”
L&G reported £2.5bn in operating profit for 2022, slightly beating analysts’ expectations and helped by a busy market for corporate pension deals, where companies pay premiums to waive pension obligations to insurers.
Higher interest rates have encouraged this activity, by increasing the funding level of schemes and making it easier to carry out transactions. Rising rates also improve the solvency position of life insurance companies.
L&G said its solvency ratio – capital as a percentage of the regulatory minimum – had risen from 187 percent to a record 236 percent at the end of the year.
The board said it had begun a “rigorous process” to replace Wilson as chief executive. It considers both internal and external candidates and the process can take up to a year.