In the first quarter, M&G (MNG.L)’s wholesale asset management business received 1 billion pounds ($1.25 billion) of net inflows, offsetting institutional client redemptions.
Despite redemptions precipitated by a “mini-budget crisis” in September 2022, the insurer and asset management reported net client inflows, excluding its Heritage business, of 0.4 billion pounds, concluding a period of poor performance in its British market.
The firm’s assets under management and administration rose 2 billion pounds to 344 billion pounds from 0.3 billion in 2022.
“Notwithstanding an uncertain external environment, we are building on the inherent strengths of our differentiated business model, delivering profitable growth alongside attractive shareholders returns,” stated CEO Andrea Rossi.
M&G’s Solvency II coverage ratio rose to 200% from 199% despite market volatility. As of March, 68% of mutual funds performed in the top two quartiles over one year and 75% over three years.
“M&G has improved its capital strength in 1Q 2023, more than compensating for the 310 million pound dividend paid in the quarter,” Jefferies analysts noted, citing RBC’s “positive surprise” Solvency II uplift.
“We would have expected falling UK rates and CRE (commercial real estate) valuations to have more of a negative impact over the quarter,” RBC wrote.
Compared to a flat FTSE 100 index, shares were 0.6% lower at 8:49 a.m.
Rossi is conserving M&G’s balance sheet while watching costs.
A March voluntary redundancy program eliminated 4% of the workforce when more than 200 employees were accepted.
M&G said it had subleased extra London office space and will review its footprint in the second half of the year.
M&G may be an acquisition target of Australian investment bank Macquarie Group Ltd (MQG.AX) since asset managers may need to consolidate to compete in harsh economic conditions.
In March, Rossi stated the company could raise profits alone and would not interact with buyers.
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