I’m not happy with the Legal & General Group (LSE: LGEN) share price. Having bought the insurer and asset manager twice last year, I hoped it would do better. 

Legal & General shares are up just 2.18% over the last 12 months, trailing the FTSE 100 which grew 9.64% over the same timescale. Over three years, they’re down 17.96%.

I’m sitting on a tiny gain but at least I’ve got some dividends, and with a trailing yield of 8.97%, that’s well worth having.

FTSE 100 underperformer

I’m not selling. I plan to hold this stock for years. The only question is whether I take advantage of recent volatility to up my stake and bag an even bigger income stream. But first, I want to analyse what’s gone wrong.

Actually, it’s not rocket science. The business isn’t growing fast enough to justify a higher share price. In full-year 2023, operating profits came in flat at £1.67bn, while profit after tax fell 41.6% to £457m.

The balance sheet remains healthy with a Solvency II coverage ratio of 224%, while new CEO António Simões says L&G’s on course to hit five-year targets. Yet shareholders were disappointed and even a 5% dividend hike couldn’t cheer them up. Nor did vague talk of future share buybacks.

Last month’s first-half results showed profit up just 1% to £849m. That’s also a bit ‘meh’, even if it beat forecasts. Profits after tax fell from £377m to £233m, while assets under management shrank from £1.17trn to £1.14trn. Again, the dividend was the bright spot, with the interim payout up 5%, while Simões reported “progress in undertaking a £200m share buyback”.

Not very impressive though, isn’t it? Especially with FTSE 100 rival Aviva bombing happily along. Its shares are up a blockbuster 31.6% over 12 months, but let’s not go there. I didn’t buy Aviva. I bought L&G. Annoyingly.

Can L&G give us some growth soon?

Simões has a job to do getting this giant moving again. There are some positives, with annuity sales doubling, as pensioners rush to lock into today’s higher rates of income. Unfortunately, sales are likely to retreat when interest rates fall.

The bulk annuity business offers better long-term prospects, but L&G isn’t the only insurer to spot the opportunity here. Other big names are piling in. And the board still needs to sort out its underperforming asset management business. While a stock market recovery would help here, shares might crash instead.

Analysts covering Legal & General have set a median 12-month share price target of 262.6p. That’s 15.6% above today’s 227p, should it happen. Throw in the yield and that’s a total return of almost 25%. Nothing is guaranteed though.

I bought Legal & General when the shares were dirt cheap, trading at around seven times earnings. After recent disappointing results they now trade at just over 30 times earnings. I won’t buy more today. It’s not all gloom though. I’ll get my next dividend on 27 September. But one day I’d like to see some share price growth too.