M&G to focus on better performance as profits reduce by 4%

M&G Investments commits to improving performance as it reports 4 per cent reductions in both operating profit and cash levels remitted to the business as parent company Prudential released its annual results this morning.

For the 12 months to 31 January, M&G saw operating profits fall from £442m to £425m.

Externally managed assets increased by 8 per cent to £137bn, with internal assets bringing total AUM to £265bn, an increase on £246bn in 2015.

The asset management arm of Prudential reported case remitted to the business of £290m, down from £302m last year.

Group chief executive Mike Wells says as group IFRS operating profit was 2 per cent lower at £4.26m – albeit up 7 per cent on actual exchange rate basis – while Asian and US businesses generated 15 per cent and 7 per cent respectively, the contribution from the UK business fell by 23 per cent.

He says: “Here, as expected, the overall result was impacted by the effect of negative fund flows at M&G, our deliberate withdrawal from the UK bulk annuity market as returns ceased to be attractive and a lower contribution from UK capital optimisation actions.”

Prudential’s full year dividend was up by 12 per cent, to 43.5p per share.

The group’s overall performance was driven by Asia, where quarterly annual premium equivalent sales exceeded £1bn for the first time, and growth up more than 20 per cent in eight of its markets across the region.

UK life retail APE sales were up 33 per cent to £1.16bn, while PruFund APE sales were up 52 per cent to £873m.

With M&G recognising market volatility with the launch of its Global Target Return and Absolute Return Bond funds, Wells adds the group was remaining focused on “careful management of costs and improving performance”.

In addition, he says the group is adapting well to the UK’s changing marketplace and new capital rules, with retail sales now higher than before the RDR.

“PruFund sales growth continues to outperform the market, and our retail sales are now higher than before the Retail Distribution Review.

“During this period of change we remain focused on delivering high-quality products to meet our customers’ evolving needs.

“The FCA’s thematic review of non-advised annuity sales practices showed that, in a portion of annuity sales that the UK business made since July 2008, it was not adequately explained to customers that they may have been eligible for an enhanced annuity. We are continuing to work to ensure we put things right.”