Legal & General (L&G) has made two major infrastructure investments totalling £159m (€192m) to add to its annuity portfolio.
It is investing £89m over 32 years as part of a consortium to build the new Royal Liverpool University Hospital for £335m.
And it has just completed the acquisition of 13 care homes from Prestbury Investments for £70m.
These latest moves support L&G’s stated intention of playing a greater role in housing and infrastructure investment in the UK, providing long-term capital to the energy, education, transport, housing and health sectors.
L&G said it believes infrastructure investment is an attractive asset class because it provides an excellent match for its long-term liabilities.
Furthermore, matching annuities with UK infrastructure increases the returns on its funds, helping L&G to continue to offer competitive annuity pricing, it said.
Finally, investment in UK infrastructure projects drives UK economic growth, creating roads, schools and hospitals, which benefit the UK population.
The acquisition of care homes for the elderly is L&G’s first investment in the sector.
The homes are let to Methodist Homes (MH), a care home provider.
L&G has lowered the current rents by providing MH with long-term stable financing, with leases that have annual rent reviews linked to the retail prices index, creating stability and certainty.
Paul Stanworth, managing director at Legal & General Capital, said: “Legal & General is committed to investing in the fabric of the UK. There is a chronic shortage of housing in the UK, and we want to help to address this problem.
“We have already invested over £750m in student accommodation, have part acquired CALA Homes and plan to move into homes to rent.
“A better infrastructure also includes better healthcare, and the new Royal Liverpool will help improve quality of life in the city and contribute to economic growth in the north west.”
L&G said the successful outcome of the Solvency II negotiations now allows it to increase the pace and scale of its investment programme in UK infrastructure.
L&G now has £3bn invested in UK infrastructure projects, and is one of the six UK insurers committed to investing £25bn in the UK over the next five years.