M&G on track to accomplish targets after strong start to 2023

The boss of M&G has claimed the investment manager is ‘on track’ to meet targets under its transformation plan after wholesale inflows ticked higher and headcount was reduced.

The FTSE 100 group reported net client inflows, excluding its heritage business, of about £400milion for the opening three months of 2023, compared to £300million for the 2022 financial year.

This was achieved thanks to net wholesale asset management inflows of £1billion, offsetting £900million of outflows from institutional clients, which the firm blamed on the ‘mini-budget crisis’ of September last year. 

In its full-year results, published in March M&G set out a transformation plan with the key goals of financial strength through capital discipline, simplification and profitable growth focused on asset and wealth management.

Chief executive Andrea Rossi said on Thursday the group had ‘made good progress on each of those fronts and are on track to deliver on our ambitious targets’.

Its Solvency II ratio – an important measure of capital strength – tipped up to 200 per cent even after paying a £310million dividend to shareholders, while assets under management rose by £2billion to £344billion. 

M&G further announced that more than 200 employees had applied for voluntary redundancy, equivalent to around 4 per cent of its workforce.

These job cuts, most of which are expected to happen during the end of 2023 or early 2024, form part of measures to reduce the firm’s costs by £200million in the coming two years.

The company revealed the headcount reduction programme in March after its assets under management slumped by £28billion last year because of ‘adverse market movements’.

Its adjusted pre-tax operating profits fell by over a quarter last year, due mainly to a substantial charge from duration mismatching losses in its annuity portfolio and foreign exchange losses on its US dollar-subordinated debt. 

M&G shares were 1 per cent lower at 201.9p on Thursday morning, about 20 per cent below its pre-pandemic peak.

Richard Hunter, head of markets at Interactive Investor, said: ‘The sector in which M&G operates is increasingly competitive, and the group has its work cut out to achieve its golden aim of increasing funds under management.’

M&G used to be part of Prudential until the insurer demerged its European and UK business in late 2019 in order to concentrate on growing its Asian operation.