Legal & General CEO Tim Breedon to Retire at End of 2012

Legal & General Group Plc (LGEN), the biggest investor in the U.K. stock market, said Chief Executive Officer Tim Breedon plans to retire at the end of 2012 after seven years in the job.

The British insurer’s board will “in due course” start a process to find a successor to Breedon, who was appointed CEO in January 2006 and joined Legal & General in 1987, the London- based company said today in a statement.

Finance Director Nigel Wilson, who joined the firm in September 2009, is “likely to be in pole position” to replace Breedon, according to Eamonn Flanagan, a Liverpool-based analyst at Shore Capital Group Ltd., who has a “buy” rating on the stock.

Breedon, 53, steered the company through the financial crisis by booking extra capital reserves and cutting the insurer’s dividend as the stock dropped to 23 pence a share in March 2009. The firm, with 362 billion pounds ($560 billion) of assets, has since quadrupled its value as it unveiled a strategy to generate more cash for shareholders by writing less risky policies that generated profits more quickly.

“With the company in excellent shape, I feel that next year will be the right time to retire,” Breedon said in the statement. “By giving notice of this now, the board will have ample time to plan and ensure an orderly succession.”

Legal & General fell 3.2 percent today to 92.6 pence a share, giving the company a market value of 5.4 billion pounds.

Cash Flow

The shares have fallen 26 percent since Breedon took charge as CEO, while U.K. rivals Aviva Plc and Old Mutual Plc have fallen 60 percent and 35 percent respectively in the period. Prudential Plc, the biggest British insurer, has climbed 2 percent.

Today’s announcement comes 18 months after John Stewart, former CEO of National Australia Bank Ltd., was appointed chairman. Stewart said he’s looking forward to the “next phase,” in the statement.

Wilson, 54, joined the insurer from publisher United Business Media Ltd. (UBM) and changed the company’s reporting procedures to focus more on cash flow, making the firm easier to understand for investors who don’t specialize in insurance. He has a doctorate from Massachusetts Institute Of Technology.

Legal & General has a history of promoting CEOs from within. Breedon became CEO after 20 years with the firm and previously led its investment management division. David Prosser, his predecessor, spent 18 years at the company.

Breedon retires on the eve of a regulatory overhaul. Solvency II, to be implemented in 2013, is the pan-European set of rules designed to strengthen insurers’ reserves to protect policyholders against a decline in investment markets. Breedon in October last year said that insurers shouldn’t be punished by regulators for the risks and “deeply flawed compensation systems” of banks.

Breedon’s compensation in 2010 was 1.86 million pounds, including a 785,000-pound salary, according to the company’s annual report.

To contact the reporter on this story: Anne-Sylvaine Chassany in Paris at achassany@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net

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