Insurer M&G capital generation on track after H1 profit

[LONDON] M&G said on Tuesday it was on course to meet its capital generation target, after the British insurer and asset manager beat estimates for first-half operating profit.

Total capital generation was £869 million (S$1.63 billion), on track for a target of £2.2 billion by the end of 2022.

That prompted Bank of America analysts to say they expected M&G to buy back £500 million in shares in 2022-24, while reiterating their "neutral" rating on the stock.

The results "show good progress on our actions to reposition the business for sustainable growth", chief executive John Foley said in a trading statement.

Adjusted operating profit rose 6 per cent to £327 million against an estimated £293 million according to a company-supplied consensus poll.

M&G's assets under management and administration totalled £370 billion, however, below the £376 billion forecast.

Institutional assets under management reached a record high £89.7 billion but the retail asset management business saw net outflows of £3.4 billion in the six months to end-June.

Investors pulled £900 million from M&G's UK retail property fund after it reopened in May following 17 months of suspension.

Asset managers Schroders and St James's Place last month reported record levels of funds under management, helped by strong asset performance and a focus on savings during the pandemic.

But abrdn, formerly Standard Life Aberdeen, said on Tuesday that assets under management and administration dropped over the last six months, driven by £5.6 billion in net outflows.

Mr Foley said M&G, formed after Prudential split off its UK and European insurance and asset management business in 2019, had received no takeover approaches.

Schroders had considered buying M&G's asset management business but decided the unit was too expensive, Bloomberg reported earlier this year.

"I think it's lazy thinking which suggests you might benefit from separating the (M&G) companies," Mr Foley told Reuters.

M&G said it would pay a dividend of 6.1 pence per share, against a forecast 6.0 pence.

REUTERS