Inflows take sting out of M&G performance, shares rise

Illustration shows a smartphone with displayed M&G plc logo

By Carolyn Cohn

LONDON (Reuters) -M&G recorded net inflows into its asset management business in the first half, the British insurer and asset manager said on Thursday, helping its operating profit to come in above forecast and sending its shares higher.

M&G, which split off from Prudential in 2019, has suffered from net outflows and failed to boost its share price since listing.

A reduction in fees, improved risk analysis and rationalisation of some funds enabled M&G to post inflows from retail and institutional investors totalling 1.2 billion pounds ($1.47 billion) versus 2.0 billion in outflows a year ago.

"We've applied a lot of medicine and it's worked," CEO John Foley told Reuters, adding the firm had already won a "couple of significant mandates" from institutional investors in the second half.

M&G suffered a 44% fall in adjusted operating profit to 182 million pounds, but beat analysts' expectations of 144 million.

Insurers and asset managers have faced hits to their investment income and assets under management as a result of market shocks this year, while high inflation is encouraging potential customers to economise.

Rival abrdn's shares slid this week after its half-yearly profit missed expectations.

M&G's assets under management and administration dropped 6% in the first half to 349 billion pounds, but again this was above forecasts of 340 billion pounds.

Foley said M&G could make further acquisitions to strengthen its wealth business after buying financial advice provider Continuum this month, though he added valuations are high.

M&G's shares were up 1.9% at 0726 GMT, one of the top gainers in the FTSE 100. KBW analysts described the results as "respectable", reiterating their "outperform" rating on the stock.

Foley, who earlier this year announced plans to retire, said he had not yet set a date for his departure. A succession process is underway led by Edward Braham, who became chair in March.

M&G said it would pay an interim dividend of 6.2 pence per share.

($1 = 0.8178 pounds)

(Reporting by Carolyn Cohn, editing by Sinead Cruise and David Evans)