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27 May 2020

M&G plc business update for the 2020 Annual General Meeting

2020

M&G plc provides the following business update in advance of its Annual General Meeting, scheduled for 10am today.

Throughout the COVID-19 crisis, our priority has been the well-being and safety of our colleagues, the continued service to our customers and clients, and the long-term resilience of our business.

Highlights

  • M&G plc is financially strong. Our shareholder Solvency II coverage ratio has remained comfortably above our risk appetite throughout this crisis, and stood at 168% at 31 March 2020
  • Given our financial strength and the importance of dividends to investors, we will pay our dividends of £410m (comprising an ordinary dividend of 11.92 pence per share and a special demerger dividend of 3.85 pence per share) on 29 May as previously announced
  • M&G’s 6,000 colleagues will continue to serve our customers and manage their assets from their homes until it is safe for them to return to our offices. No colleague has been put on furlough and we have not taken any government financial assistance related to COVID-19
  • Total assets under management and administration (AUMA) were £323bn as at 31 March 2020, compared with £352bn at the end of 2019. The fall largely reflects the shock to markets in March from the disruption associated with the outbreak of COVID-19
  • Our Institutional Asset Management business continues to perform well through the crisis, attracting net inflows of £2.1bn during the first quarter. Similarly, in the UK, our Retail Savings franchise saw net inflows of £0.7bn. These positive movements were offset by Retail Asset Management net outflows of £5.6bn in the quarter.
  • Adjusted operating profit of £134m reflected strong underlying business performance, offset by negative mark to market impacts
  • Our Heritage segment - the Prudential UK life insurance and annuity book which is closed to new customers - continues to generate steady cashflow
  • High quality credit book: 98% of our shareholder annuity debt portfolio is investment grade
  • We continue to be sharply focused on costs, and remain committed to our target of £145m of annual shareholder cost savings by the end of 2022
  • The rating agencies Moody’s and Fitch have affirmed M&G's insurance financial strength ratings at ‘Aa3’ and ‘AA-' respectively, with stable outlooks, following the assessment of coronavirus impact on UK insurers
  • Further details on our financial performance for the first quarter of the year are provided below
  • M&G also announces today an agreement with Royal London to acquire its digital wrap and wealth management platform for UK independent financial advisers, Ascentric.

John Foley, Chief Executive, says:
“I’ve been through a number of financial crises, but none has been like this terrible pandemic. It is testing all of us, in many different ways.

“Fortunately, M&G is a resilient business and I am proud of how my colleagues have risen to the challenge of continuing to serve, from their homes, the millions of customers we have around the world.

“Our financial strength means we can also do the right thing by our shareholders, and make good on our announced intention to pay dividends totalling £410m. Many of our shareholders are income funds or individual savers who rely on these payments for part of their retirement income.

“While markets have recovered from their March lows, I expect volatility to continue, but as an asset owner of scale we are well positioned to acquire assets at competitive prices. In the meantime, we will continue to manage the business in a prudent way, with our usual disciplined approach to capital management.”

M&G will host a Q&A call with analysts and investors at 8.30am this morning. To listen to the call, dial +44 20 3936 2999 and use access code 863296.

Media enquiries

Investors/Analysts

Spencer Horgan

Director of Investor Relations

Notes to editors

Open1.
This announcement is a trading update only and does not constitute an interim report
Open2.
The Group uses Alternative Performance Measures, including certain adjusted measures, to help explain business performance and financial position. These measures have been calculated consistently with those for the year ended 31 December 2019 and reconciliations will be provided with the condensed consolidated financial statements for the period ended 30 June 2020.
Open3.

Ascentric is a digital wrap and wealth management platform, available exclusively to financial advisers and offers a fully integrated online investment management and dealing platform. It also enables advisers to transfer their clients’ assets onto a single platform to provide them with the ability to manage their clients’ financial needs in just one place.

Ascentric is the trading name for the group of businesses sold, which includes Wrap IFA Services Limited and its subsidiaries.

Open4.
M&G plc is a savings and investment business which was formed in 2017 through the merger of Prudential plc’s UK and Europe savings and insurance operation and M&G Investments, the international asset manager. Following the completion of its demerger from Prudential plc, M&G plc shares were admitted to trading on the London Stock Exchange on 21 October 2019. As an independent company, M&G plc has a single corporate identity and continues with two customer-facing brands; Prudential for savings and insurance customers in the UK and Europe and for asset management in South Africa and M&G Investments for asset management clients globally.
Open5.
M&G plc, a company incorporated in the United Kingdom, is the direct parent company of The Prudential Assurance Company Limited. The Prudential Assurance Company Limited is not affiliated in any manner with Prudential Financial, Inc., a company whose principal place of business is in the United States of America or Prudential plc, an international group incorporated in the United Kingdom.

This announcement may contain certain ‘forward-looking statements’ with respect to M&G plc and its affiliates (the “M&G Group”), its plans, its current goals and expectations relating to its future financial condition, performance, results, operating environment, strategy and objectives. Statements that are not historical facts, including statements about M&G plc’s beliefs and expectations and including, without limitation, statements containing the words ‘may’, ‘will’, ‘should’, ‘continue’, ‘aims’, ‘estimates’, ‘projects’, ‘believes’, ‘intends’, ‘expects’, ‘plans’, ‘seeks’, ‘outlook’ and ‘anticipates’, and words of similar meaning, are forward-looking statements. These statements are based on plans, estimates and projections as at the time they are made, and therefore persons reading this announcement are cautioned against placing undue reliance on forward-looking statements.

By their nature, all forward-looking statements involve inherent assumptions, risk and uncertainty, as they generally relate to future events and circumstances that may be beyond the M&G Group’s control. A number of important factors could cause M&G plc’s actual future financial condition or performance or other indicated results to differ materially from those indicated in any forward-looking statement.

Such factors include, but are not limited to, UK domestic and global economic and business conditions (including the political, legal and economic effects of the UK’s decision to leave the European Union and the impact of the COVID-19 pandemic); market-related conditions and risk, including fluctuations in interest rates and exchange rates, the potential for a sustained low-interest rate environment, corporate liquidity risk and the future trading value of the shares of M&G plc; investment portfolio-related risks, such as the performance of financial markets generally; the policies and actions of regulatory authorities, including, for example, new government initiatives; the impact of competition, economic uncertainty, inflation and deflation; the effect on M&G plc's business and results from, in particular, mortality and morbidity trends, longevity assumptions, lapse rates and policy renewal rates; the timing, impact and other uncertainties of future acquisitions or combinations within relevant industries; the impact of internal projects and other strategic actions, such as transformation programmes, failing to meet their objectives; the impact of operational risks, including risk associated with third party arrangements, reliance on third party distribution channels and disruption to the availability, confidentiality or integrity of M&G plc's IT systems (or those of its suppliers); the impact of changes in capital, solvency standards, accounting standards or relevant regulatory frameworks, and tax and other legislation and regulations in the jurisdictions in which the M&G Group operates; and the impact of legal and regulatory actions, investigations and disputes. These and other important factors may, for example, result in changes to assumptions used for determining results of operations or re-estimations of reserves for future policy benefits.

Any forward-looking statements contained in this document speak only as of the date on which they are made. M&G plc expressly disclaims any obligation to update any of the forward-looking statements contained in this document or any other forward-looking statements it may make, whether as a result of future events, new information or otherwise except as required pursuant to the UK Prospectus Rules, the UK Listing Rules, the UK Disclosure and Transparency Rules, or other applicable laws and regulations. Nothing in this announcement shall be construed as a profit forecast, or an offer to sell or the solicitation of an offer to buy any securities.

LEI: 254900TWUJUQ44TQJY84

Classification: 3.1 Additional regulated information required to be disclosed under the laws of a Member State

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This section of the website is for the sole use of investment professionals. It should not be relied on by private investors and the information should not be construed as a financial promotion under the Financial Conduct Authority’s (FCA) Conduct of Business rules.

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M&G plc is a company incorporated and with its principal place of business in England, and its affiliated companies constitute a leading savings and investments business. M&G plc is the direct parent company of The Prudential Assurance Company Limited. The Prudential Assurance Company Limited is not affiliated in any manner with Prudential Financial, Inc, a company whose principal place of business is in the United States of America or Prudential plc, an international group incorporated in England and Wales.

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M&G plc, incorporated and registered in England and Wales. Registered office: 10 Fenchurch Avenue, London EC3M 5AG. Registered number 11444019. M&G plc is a holding company, some of whose subsidiaries are authorised and regulated, as applicable, by the Prudential Regulation Authority and the Financial Conduct Authority.

M&G plc is a company incorporated and with its principal place of business in England, and its affiliated companies constitute a leading savings and investments business. M&G plc is the direct parent company of The Prudential Assurance Company Limited. The Prudential Assurance Company Limited is not affiliated in any manner with Prudential Financial, Inc, a company whose principal place of business is in the United States of America or Prudential plc, an international group incorporated in England and Wales.

M&G plc は、イングランド及びウェールズで設立・登録。本社登録地は10 Fenchurch Avenue, London EC3M 5AG。登録番号11444019。M&G plcは持ち株会社で、その子会社の一部はPRA(健全性監督機構)及びFCA(金融行為規制機構) に認可され、それらの規制対象となっています。

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Prudential plc

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M&G plc, incorporated and registered in England and Wales. Registered office: 10 Fenchurch Avenue, London EC3M 5AG. Registered number 11444019. M&G plc is a holding company, some of whose subsidiaries are authorised and regulated, as applicable, by the Prudential Regulation Authority and the Financial Conduct Authority.

M&G plc is a company incorporated and with its principal place of business in England, and its affiliated companies constitute a leading savings and investments business. M&G plc is the direct parent company of The Prudential Assurance Company Limited. The Prudential Assurance Company Limited is not affiliated in any manner with Prudential Financial, Inc, a company whose principal place of business is in the United States of America or Prudential plc, an international group incorporated in England and Wales.