27th Jan 2026 09:07
(Alliance News) - M&G PLC on Tuesday noted the UK government's announcement regarding proposed changes to ground rents in England and Wales.
The London-based asset manager said that, once the proposed changes take effect in the current form, expected in 2028, it would anticipate a GBP15 million reduction in annual adjusted operating profit and underlying capital generation, citing lower surplus assets in its annuity book.
For 2024, M&G had reported an adjusted operating profit before tax of GBP837 million, up 5.0% from GBP797 million in 2023. It will publish 2025 results on March 12.
M&G on Tuesday reconfirmed its adjusted operating profit growth and capital generation targets, as well as its existing progressive dividend policy.
The UK government on Tuesday announced that it plans to cap existing annual ground rents at GBP250 per property from 2028 for a transition period of 40 years, at the end of which all ground rents would be reduced to zero.
M&G said it is directly exposed to GBP722 million of ground rent assets via its Prudential Assurance Company shareholder fund, with a with-profits fund exposure to ground rents at GBP324 million. The company highlighted that investment risk is not borne by shareholders.
Further, should the proposed changes be approved in the current form, the write down in valuation of M&G's relevant assets is expected to lead to a GBP230 million one-off reduction in group Solvency II own funds. The impact on the group Solvency II surplus would be limited to a GBP140 million reduction due to the release of the solvency capital requirement allowance already made.
Chief Executive Officer Andrea Rossi said: "M&G fully supports the government's objective to strengthen leaseholder protection and tackle remaining egregious ground rents. However, we are disappointed that we have not been able to agree a proportionate solution that works for all parties.
"The strong financial position of M&G and our thoughtful planning mean that we are well positioned to absorb and manage the negative impacts generated by this proposed legislation. Thanks to the quality of our business model and our disciplined approach to capital management, we today reconfirm the adjusted operating profit growth and capital generation targets announced in March 2025, and our existing progressive dividend policy."
M&G shares were down 0.1% at 306.20 pence each on Tuesday morning in London.
By Tom Budszus, Alliance News slot editor
Comments and questions to [email protected]
Copyright 2026 Alliance News Ltd. All Rights Reserved.
Related Shares:
M&G