20th Dec 2019 14:08
(Alliance News) - Moody's Investors Service on Friday praised M&G PLC's strong business position, though did caution on increasing competition.
M&G was spun off in October from FTSE 100 insurer Prudential PLC. M&G made up Prudential's UK & European operations.
Moody's has handed a (P)A2 senior unsecured and (P)A3 subordinated rating for M&G's medium term note programme.
These reflect, Moody's said: "The group's strong name and leading position in the UK with-profits savings, a growing footprint in Europe and in the global asset management industry, and solid and stable operating profitability.
"These strengths are partially offset by the group material longevity risk exposure and the still material amount of equities in the with-profits fund, albeit partially mitigated by the flexibility of the product design."
M&G could get an upgrade if profitability rises, if leverage remains below 15%, if capitalisation improves, or if the company diversifies geographically without hitting profit. However, the ratings agency did note an upgrade is unlikely.
A negative move could come if profit deteriorates, if leverage rises above 25%, and if capitalisation weakens.
Shares in M&G were 0.8% higher on Friday afternoon at a price of 238.60 pence each.
Earlier in December, M&G temporarily suspended trading in shares of its property portfolio given "unusually high" outflows. The portfolio has investments in 91 UK commercial properties across the retail, office and industrial sectors and invests on behalf of UK retail investors. At October 31, the property fund had GBP2.54 billion assets under management.
By George Collard; [email protected]
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