M&GPrudential has demerged from Prudential plc.
Introducing M&G plc.
From 21 October 2019 we’ve listed on the FTSE 100 as a new independent company, M&G plc.
We’ll continue to operate with two strong customer-facing brands: Prudential and M&G Investments.
What does this mean for you and your clients?
- This is a corporate change and you’ll see no change in the services you receive from us, the products you buy, the policies and investments your clients hold.
- Prudential products and investments and M&G funds are unaffected by the demerger; they will be run and regulated in the same way as before.
- Prudential products and policies will continue to be backed by the size and financial strength of the Prudential Assurance Company, which is part of M&G plc.
This demerger gives us a great opportunity to continue working together to help create better futures for customers in the UK and across the globe.
Support for you and your clients
Hear from our Chief Executive, John Foley
We have a dedicated page for customers questions and answers on pru.co.uk
You can read the full company Prospectus here, but we’ve pulled out some of the key highlights below.
Key highlights of M&G plc
A savings and investments business with a unique and compelling business mix
All figures are as at the end H1 2019.
- £341.1bn of assets under management and administration (“AuMA”)
- £210.4bn in Savings & Asset Management segment AuMA, comprising £135.9bn in retail AuMA, including the PruFund smoothed return proposition, which has experienced significant growth over the last three years, and nearly £75bn in external institutional AuMA
- £130.7bn in Heritage segment AuMA, primarily comprising traditional with-profits, annuities and corporate pensions businesses
- One of Europe’s largest asset managers, including the UK’s largest open with-profits fund with £143.7bn in AuMA
- One of the UK’s largest active fixed income asset managers
Strong distribution and customer engagement
- Serving around 5.5m retail customers and provides investment solutions to more than 800 institutional clients
- Operates internationally and distributes its products across 28 markets through a network of 20 offices
Well positioned to take advantage of structural trends impacting its markets
- Well positioned in large, growing markets with a broad range of retail and institutional investment capabilities and the ability to provide bespoke solutions to meet clients’ demands
Proven investment capability driving growth in AuMA
- PruFund attracted net inflows of £8.5bn, £9.0bn and £6.5bn in 2018, 2017 and 2016 respectively and £3.5bn in H1 2019 to total AuMA of £49.6bn
- 55% of M&G’s retail mutual funds were in the top performance quartile of their respective peer group in 2018 based on a three-year track record
- 86% of institutional asset management solutions achieved their investment objectives over the three years ended 30 June 2019
Attractive financial profile with diverse and resilient earnings
- M&G benefits from diverse earnings sources. In the Savings & Asset Management segment, earnings are primarily driven by fees typically related to the level of AuMA net of expenses and by the shareholder share of the PruFund returns. In the Heritage segment, the main sources of earnings are income from shareholder annuities and the shareholder share of the traditional with-profits returns. Both of these Heritage books are closed to new customers, but, subject to financial market conditions, earnings are expected to remain resilient over the medium term.
Transformation Programme expected to deliver improved customer experiences and reduced costs
- Heavy investment (c.£250m) in a focused transformation programme aimed at delivering enhanced digitalised experience, improved efficiency, greater variability in the cost base and increased platform scalability
Clear strategy for growth and returns, focused on:
- Continued expansion of its investment capabilities in private and illiquid asset solutions
- Building further on its leading position and reach in the advised UK savings and asset management market through investing in its digital platforms to improve adviser and customer experience and outcomes
- Leveraging its European distribution network and international relationships with global and local banks to capture growing demand for bespoke and sub-advised investment solutions
Common question and answers
- Will clients and customers see any change in their service or the income they receive, or the investments they hold as a result of demerger?
- Will the name that clients and customers see on their statements and letters change as a result of demerger?
No. The Prudential Assurance Company and all our Prudential business in the UK, Europe and South Africa will continue to use the brand name Prudential.
- Is Prudential changing its name to M&G?
M&G plc will be our corporate name, under which we are listed on the London Stock Exchange. The Prudential Assurance Company and all our Prudential business in the UK, Europe and South Africa will keep using the name Prudential.
- How is the demerger going to affect M&G Investments?
The demerger is a change to M&G Investments' parent company – it does not impact M&G Investments' customers, what the business offers or how it operates.
- M&G plc is going to be much smaller than the old Prudential plc was. Does this demerger mean my client’s policy/investment with you is less safe and secure?
There's no change to your Prudential policy as a result of the demerger. Your policy is written by the Prudential Assurance Company, which now be part of M&G plc, but is otherwise is completely unaffected by the demerger.
PruFolio investments and M&G funds are also unaffected by the demerger, and will continue to be run and be regulated in the same way as before. Client money and client assets held in PruFolio and M&G funds continue to be held completely separately from the company's (M&G plc) own assets.
M&G plc is expected to be included in the FTSE 100 and has £341 billion in assets under management, over five million customers and operations in 28 markets around the world.
- Does the demerger change whom you are regulated by?
The regulated entities through which we serve our customers are not changed by the demerger.
Because M&G plc will not have a secondary Hong Kong stock market listing, we will not be regulated by the Securities and Futures Commission of Hong Kong, as we were as a part of Prudential plc.
- Will you be giving policyholders and/or customers a windfall or bonus to mark the demerger?
- Will you be writing to all customers about the demerger?
We will not be writing to all customers. At the time of demerger itself we will be writing to institutional customers about our new corporate structure, because in some cases this is required by our investment management agreements.
- What are your financial strength ratings?
S&P has given M&G plc an indicative credit rating of A- for the three substitutable hybrid debt instruments issued by Prudential plc in October 2018, and Moody’s is A2.
Fitch has assigned M&G plc a credit rating of ‘A+’
All three main credit rating agencies have reviewed Prudential Assurance Company’s financial strength ratings, and these are unchanged as a result of the demerger, with a stable outlook from all three. (S&P: A+; Moody’s: Aa3; Fitch: AA-).
- My client has a With-profits policy, will the demerger impact their bonuses or future bonuses?
The demerger will not impact your investment in anyway.
- Why should clients continue to invest in PruFund?
PruFund is a core part of the new company’s proposition and continues to be a popular investment choice for many clients – the demerger does not impact PruFund. It remains backed by the size and strength of the Prudential Assurance Company, which will be part of M&G plc, but otherwise is completely unaffected by the demerger.