Prudential has revealed that it is to combine its two separate UK businesses into one – merging its asset manager M&G with its insurance arm Prudential UK & Europe to form M&G Prudential.
The move, it says, will cut costs and address what it called a “growing customer demand for comprehensive financial solutions,” but will no doubt heighten speculation over whether the firm may be planning to sell off its UK business
. The combined business will manage £332 billion of assets for over six million customers in the UK and internationally, having quadrupled its total external assets since 2008, Prudential said in a release today.
The firm also released its mid-year financials today, which it described as a “broad-based performance” led by double-digit growth in Asia. Operating profits rose five per cent (5%) to £2.4 billion, while the dividend was increased by 12 per cent (12%) to 14.5p per share. “In Asia, we continue to leverage our structural advantages, delivering a 16 per cent (16%) increase in IFRS operating profit and 15 per cent (15%) growth in free surplus generation,” group chief exec Mike Wells commented.
M&G Prudential will be better positioned to develop and fund joint product propositions and to build new digital services and distribution to meet fast changing customer needs, the company said in a release. The new entity will combine M&G’s active investment expertise with Prudential UK&E’s capabilities in volatility-adjusted savings and liability-driven investment to provide more choice for customers across both brands through retail, institutional and direct channels.
Current chief executive of Prudential UK&E, John Foley, will become chief executive of M&G Prudential and remains a member of the Prudential plc Board. Anne Richards will remain chief executive of M&G and a member of the Prudential plc Board, and both Anne Richards and Clare Bousfield, CEO insurance for Prudential UK&E, will become deputy chief executives of M&G Prudential.
Wells described M&G and Prudential UK&E as having “a long history of collaboration,” adding that the group was fortunate to have two “highly respected” brands.
“Combining these businesses will allow us to better leverage our considerable scale and capabilities,” he said. “In recent years, we have seen a convergence in the investments and savings markets with customers across all geographies and demographics demanding more comprehensive solutions to their financial needs. Bringing together these two high-quality businesses, while transitioning to a capital-light model, will enable M&G Prudential to increase its growth prospects by providing better outcomes for our millions of customers and in turn generate strong returns for our shareholders.”
Foley added: “Prudential UK&E and M&G both offer well designed solutions which help investors meet their most important financial goals. Combining their complementary strengths allows us to provide greater choice to a wider range of customers.”
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