- The investment manager from insurance giant Prudential six years ago
M&G has launched a new progressive dividend policy after the fund manager’s aggressive cost cuts helped deliver a surprise growth in annual profits.
Boss Andrea Rossi revealed ‘a new phase for the group’ on Wednesday as M&G set fresh targets for profit, capital, and savings.
M&G’s adjusted operating profits grew by 5 per cent to £837million last year, instead of falling to £767million as forecast by analysts.
The investment manager, which demerged from insurance giant Prudential six years ago, has unveiled a second interim dividend of 13.5p per share for 2024.
It takes the FTSE 100 company’s total dividend for the year to 20.1p per share, reflecting a 2 per cent year-on-year uplift.
M&G said the result reflected ‘stable results’ from its life and corporate centre arms, as well as marginally greater revenues and lower costs in its asset management division.
However, the London-based group swung from a £309million statutory profit the prior year to a loss of £347million.
Investment manager M&G has launched a progressive dividend policy after posting a surprise growth in annual profits
It said sustained yield rises led to greater fair value losses on interest rate hedging and the surplus assets in its annuity portfolio.
Nonetheless, Andrea Rossi, chief executive of M&G, said the business had ‘delivered strategic and operational momentum with meaningful progress across our three priorities: financial strength, simplification, and growth’.
He added: ‘Given our confidence in the outlook of M&G, I am delighted to announce that today we are moving to a progressive dividend policy, starting with a 2 per cent increase for the 2024 total dividend per share.’
Alongside the new dividend policy, the firm has announced new targets, including an upgrade to cost savings from £220million to £230million by the end of 2025.
Over the next three years, it wants to achieve a further £2.7billion in cumulative operating capital generation and boost adjusted operating profits annually by 5 per cent on average.
M&G shares were 2.8 per cent higher at 227.3p on Wednesday morning, taking their gains to around 14 per cent since the year started.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, believes a significant issue for M&G going forward is its small proportion of the bulk purchase annuity market relative to other firms.
M&G has written £1.5billion of new annuity business since re-entering the market in 2023, as more employers have sought to de-risk their pension schemes.
However, Phoenix Group wrote £5.1billion of BPAs last year alone, including an £880million buy-in with the Rolls-Royce & Bentley Pension Fund.
Britzman said: ‘M&G wants in on the game and is back in the market, but at much smaller volumes compared to some of the leading players.
‘Despite these challenges, streamlining efforts, new cost targets, and a progressive dividend policy are positive developments.’
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This article was originally published by a www.dailymail.co.uk . Read the Original article here. .