M&G no longer the industry exception as investors pull £1.5bn

Investors in M&G pulled £1.5bn from the investment manager over the last six months, as the group finally fell foul to the mass withdrawals that have plagued the industry.

The outflows from M&G came as a surprise, as the group has traditionally been able to avoid the negative sentiment felt by many other British money managers.

For example, in 2023 the group brought in £1.1bn in new cash, and £200m in 2022, even as many asset managers experienced significant withdrawals.

Notably, the group also confirmed it would be exiting the platform market under plans to restructure its wealth decision, only three years after it paid £86m to buy Royal London’s Ascentric platform.

“We will exit our adviser digital platform as part of focusing the business,” M&G said, with the division coming under the control of life insurance CEO Clive Bolton.

The company reported the outflows along with its figures for the first six months of the year to 30 June. It reported a loss after tax of £56m, compared to a profit of £75m in the first half of last year.

Adjusted operating profit before tax declined only slightly, from £390m to £375m.

A seven per cent reduction in contributions from its life and wealth arms due to lower contractual service margin amortisation rates offset a nine per cent boost in income from its asset management arm.

Despite clients pulling £1.5bn in cash from the investment firm, M&G’s total assets under management and administration actually increased from £343.5bn at the start of this year to £346.1bn.

“Over the last 18 months, we have made meaningful progress transforming M&G by focusing on our strategic priorities: Financial Strength, simplification, and growth,” said M&G chief executive Andrea Rossi.

“Against the backdrop of a challenging market environment in the first half of the year, we have delivered another resilient financial performance with adjusted operating profit and capital generation nearly matching last year’s excellent results.”

It wasn’t all bad news from M&G though, as the group’s shareholder Solvency II coverage ratio jumped to 210 per cent, up from 203 per cent six months ago, while it reduced its debt by £461m.

The group has also continued to pursue its cost-cutting agenda, shaving off £121m in savings so far, allowing it to up its capital generation and cost-saving targets today.

“We are continuing to push further on our strategic priorities, combining our life and wealth operations to support the acceleration of our growth plan in the UK retail market. We also see growth opportunities in our international footprint and in the broadening of our product offering,” added Rossi.

“As we look ahead, the strong foundations we have built give me confidence in the long-term outlook for M&G.”