10th Nov 2015 14:18
LONDON (Alliance News) - The European fund management arm of Prudential PLC suffered heavy retail outflows in the third quarter, a blemish on a strong update from the London-listed life insurer, which continues to benefit from its focus on Asia's growing middle class and the retiring 'baby boomer' generation in the US.
Retail net outflows from M&G amounted to GBP3.9 billion in the third quarter, bringing the total for the first nine months of the year to GBP7.3 billion, Prudential said, blaming weak sentiment towards fixed income markets, broader volatility in financial markets, and macroeconomic concerns. Total retail funds under management fell to GBP63.5 billion at the end of September from GBP73.0 billion at the same stage the prior year.
The GBP1.2 billion of net inflows into M&G's institutional business were not enough to overcome the pressure on the retail side of the business, meaning that M&G's total net outflows amounted to GBP2.7 billion in the quarter. Overall, M&G's funds under management fell to GBP247.5 billion at the end of September from the GBP257.3 billion recorded at the same stage the prior year.
Eamonn Flanagan, an analyst at Shore Capital with a Buy rating on the stock, said M&G had a "disappointing" third quarter, although he noted that the institutional side of the business performed well.
Prudential's new business profit, however, continues to be driven by its ability to target 'baby boomers' in the US as they retire, and growing middle classes in Asia. New business profit in the UK, where Prudential sees an opportunity in the country's ageing population, also grew.
Group new business profit of GBP574.0 million in the three months to September 30 compared with GBP496.0 million in the corresponding quarter the prior year. Sales, on an annual premium equivalent basis, increased to GBP1.33 billion in the quarter from GBP1.12 billion the corresponding period the prior year.
"This performance reflects strong growth in our Asian and UK life operations and continued new business discipline in the US, reinforcing the diverse and resilient nature of our business during a period of significant global instability," Mike Wells, who replaced Tidjane Thiam as group chief executive in June, said in a statement.
The overall increase came about as new business profit in the US increased by 21% to GBP186.0 million from GBP154.0 million, while new business profit in Asia rose by 11% to GBP312.0 million from GBP281.0 million. New business profit in UK retail increased by 12% GBP47.0 million from GBP42.0 million.
New business profit for the first nine months of the year swelled by 17% to GBP1.76 billion from GBP1.51 billion.
"Overall, our strong performance in 2015 continues to demonstrate the successful execution of our strategy in pursuing clearly defined long-term opportunities in Asia, the US and the UK. We remain optimistic about the outlook across the group, particularly in Asia where the compelling long-term fundamentals of the region are unchanged," Wells said.
Shares in Prudential were down 3.2% at 1,501.00 pence on Tuesday afternoon.
By Samuel Agini; [email protected]; @samuelagini
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