M&g Plc · LSE:MNG
M&g — H1 2024 Earnings Presentation
54 slides from M&g's earnings presentation, Sep 4, 2024
Slide 1: Driving progress together
Driving progress together Financial strength, Simplification, Growth 2024 Half Year Results – 4 September 2024
Slide 2: Forward looking statement
M&G plc 2024 Half Year Results Forward looking statement This document may contain certain ‘forward-looking statements’ with respect to M&G plc (M&G) and its affiliates (the Group), its plans, its current goals and expectations relating to future financial condition, performance, results, operating
Slide 3: Progress on Strategic Priorities
Progress on Strategic Priorities Andrea Rossi, Group Chief Executive
Slide 4: Continuing to move forward in 2024
Continuing to move forward in 2024 1 2 3 Financial strength Simplification Growth Reduced debt by £461m Delivered £121m Continue to grow the Asset and the leverage ratio cost savings through the Manager internationally, by 3 ppts to 32% transformation programme with c. £2bn of net inflows Improved S
Slide 5: Strong progress across all targets, OCG and cost targets upgraded
Strong progress across all targets, OCG and cost targets upgraded Target FY 2023 HY 2024 Status 1 £2.5bn cumulative Financial strength OCG over 2022-24 £1.8bn £2.3bn upgrading upgrading target to £2.7bn target to Solvency II 35% 32% reduced debt by £461m leverage ratio < 30% 2 £200m cost savings Sim
Slide 6: Financial strength: M&G's leverage compares favourably with peers
1 Financial strength M&G’s leverage compares favourably with peers M&G’s leverage using Solvency II leverage ratio compares internal definition favourably on a like-for-like basis Nominal value of debt: £2.8bn Shareholder Own Funds: £8.7bn 32% 36% 29% 27% 23% M&G’s leverage using peers’ definition M
Slide 7: Simplification: Strong progress on Transformation programme
2 Financial strength Simplification Strong progress on Transformation programme Upgrading cost saving target from £200m to £220m Continuing to offset inflationary pressures New stretch target Cost savings Reduced managed costs1 by 4% YoY delivered 20 already Strong focus on cost Rationalising operat
Slide 8: Growth: Clear priorities across segments
3 Financial strength Growth Clear priorities across segments Asset Mgmt Life Wealth Continue to deliver Strengthen BPA pricing Continue to drive cost 1 strong investment 1 capabilities to meet 1 efficiency and simplify performance strong client demand operating model Focus on building Deliver proof
Slide 9: Financial review
Financial review Kathryn McLeland, Chief Financial Officer
Slide 10: Resilient Operating Profit and Capital Generation
Resilient Operating Profit and Capital Generation Financial highlights Net client Adjusted Operating Shareholder SII flows1 Operating Profit Capital Generation coverage ratio £(1.5)bn £375m £486m 210% Mainly due to Wealth 4% lower year-on-year 4% lower year-on-year Up 7 ppts on YE 2023 • £(0.9)bn ne
Slide 11: Higher AUMA driven by positive markets
Higher AUMA driven by positive markets AUMA, net flows, market and other movements Movement in AUMA (£bn) Net client flows (£bn) 344 7.31 346 H1 2023 H1 2024 Change (0.5) (0.9) (3.3) 56 Wholesale 55 Asset Mgmt. Wholesale 1.3 - (1.3) Asset Mgmt. 98 Institutional 98 Institutional Asset Mgmt. (1.4) (0.
Slide 12: Resilient Operating Profit
Resilient Operating Profit Adjusted Operating Profit by source (£m) H1 2023 H1 2024 • Asset Management earnings up by c. 9% year-on-year Asset Management 118 129 • Revenues up by c. 1% due to higher average AUM in the period, partly offset by a small reduction in fee margins from 33 to 32 bps Revenu
Slide 13: Asset Management: 9% higher AOP on improved revenues and costs
Asset Management: 9% higher AOP on improved revenues and costs Cost Income Ratio excluding performance fees down 2pp to 77% End of period AUM (£bn) Fee margins1 (bps) Revenues and costs (£m) Performance 11 11 13 fees 308 320 313 313 Investment income 303 303 (12) 5 5 Average 58 and minorities2 57 of
Slide 14: Wealth: Focus on PruFund UK
Wealth: Focus on PruFund UK Lower AOP and flows despite strong investment performance PruFund UK PruFund Growth net returns1 AOP (£m) PruFund +24% H1 2023 H1 2024 CSM release and ABI Mixed Investment 20-60% shares +4% Risk Adjustment 101 97 unwind 31/ 12/20 20 30/ 06/20 21 31/ 12/20 21 30/ 06/20 22
Slide 15: Life: Traditional With-Profits and Annuities
Life: Traditional With-Profits and Annuities Lower CSM release in Traditional WP and returns on excess assets in Annuities Traditional With-Profits Shareholder Annuities & Other AOP (£m) AOP (£m) H1 2023 H1 2024 H1 2023 H1 2024 CSM release and Annuity 47 48 Risk Adjustment 111 90 CSM release unwind
Slide 16: With-Profits: Operating change in CSM of £99m
Operating change in CSM of £99m Closing CSM of £5.8bn shows large and growing stock of discounted future value CSM movements CSM movements by product line Total (£m) Op. change £m YE 2023 A B C D in CSM E HY 2024 316 46 183 5,765 5,483 (14) Total 5,483 316 46 (14) (249) 99 183 5,765 (249) Annuities
Slide 17: Underlying Capital Generation of £297m
Underlying Capital Generation of £297m Resilient Asset Mgmt. and Wealth result, Life impacted by new business strain Underlying Capital Generation (£m) H1 2023 H1 2024 • In line with the AOP result after excluding Asset Management 119 118 investment income which is classified as other operating capi
Slide 18: Operating Capital Generation of £486m
Operating Capital Generation of £486m £2.3bn cumulative result since start of 2022 Operating Capital Generation (£m) H1 2023 H1 2024 Underlying Capital Generation 352 297 Optimisation, asset • Driven by reduced With-Profits equity exposure trading and hedging 135 137 and increased equity hedging • L
Slide 19: Strong OCG result and removal of capital restrictions lift SII ratio to 210%
Strong OCG result and removal of capital restrictions lift SII ratio to 210% Improved solvency and surplus even after c. £0.8bn of dividend and deleveraging actions 13% 3% 5% 0% 4% Solvency II 19% ratio1 (%) 203% 210% Includes the 2023 final dividend and deleveraging actions announced in June 0.5 0.
Slide 20: Managed costs are -4% YoY thanks to simplification efforts
Managed costs are -4% YoY thanks to simplification efforts Significant cost action offsetting inflation and freeing up resources to support growth M&G managed cost base1 Transformation programme comparison H1 2023 vs. H1 2024 delivering steady progress -4% 733 50 12 703 Sourcing and location strateg
Slide 21: Key messages
Key messages: 1 Resilient asset management flows and improving outlook for the second half 2 Balanced earnings profile with 9% increase in Asset Management contribution 3 Strong Operating Capital Generation of £486m, confident in continued delivery 4 Improved Solvency II ratio to 210% benefitting fr
Slide 22: Business review
Business review Andrea Rossi, Group Chief Executive
Slide 23: Asset Mgmt. Continuing to deliver strong investment performance
Asset Mgmt. Continuing to deliver strong investment performance Expect to capitalise on favourable position as market headwinds start to abate M&G’s investment performance remains strong… … while market flows starting to improve across both Institutional (£98bn) and Wholesale (£56bn) as yields reduc
Slide 24: Asset Mgmt. Internationalising the institutional franchise
Asset Mgmt. Internationalising the institutional franchise Continuing to grow in Europe and Asia, while reducing outflows in the UK Institutional UK Institutional international Increased diversification Structural headwinds from Defined … but we continue to grow abroad … improving the client mix and
Slide 25: Asset Mgmt. Capitalising on strong position in Structured Credit
Asset Mgmt. Capitalising on M&G’s strong position in Structured Credit A growing £7bn franchise within our broader Private and Structured Credit offering 20+ years of A broad and Consistent track record of strong investment innovation compelling offering long-term performance across IG and HY 2003 L
Slide 26: Life: Growth opportunity structured across three business areas
Life Growth opportunity structured across three business areas Dedicated leadership, and significant operational progress year-to-date Ambition and Dedicated Operational core focus leadership progress Scale presence in the UK • Onboarded three new schemes market through both Kerrigan • Scaled capaci
Slide 27: Life: The With-Profits Fund as key writer of insurance business
Life The With-Profits Fund as key writer of insurance business Meeting customers income and savings needs through capital-lite solutions The With-Profits … powering all business … to meet a wider range Fund engine… areas within Life… of customer needs With-Profits Exceptional financial 429% Corporat
Slide 28: Wealth: Simplifying business and operating model
Wealth Simplifying business and operating model Priority remains to drive greater efficiencies and flows into the Group Focusing Wealth and … while continuing to focus on client outcomes aligning it with the Life segment … and on improving access to PruFund PruFund +24% Investment Already closed sub
Slide 29: Shifting focus from leverage to sustainable business growth
Shifting focus from leverage to sustainable business growth Financial Strength and flexibility • Deployed £450m reducing nominal outstanding debt by £461m • Brought capital restrictions to 0, improving balance sheet efficiency Targeting Financial Stable or leverage ratio Attractive increasing DPS; •
Slide 30: Key messages
Key messages: 1 Financial Strength: 210% Solvency II coverage ratio and lowest leverage since listing 2 Simplification: Meaningful progress on the transformation programme and cost take-out 3 Growth: Positioning the Group for capital-lite growth, including within Life Insurance 4 Targets: Upgraded c
Slide 31: Appendix
Appendix Additional financial information
Slide 32: Adjusted Operating Profit to IFRS Profit After Tax
Adjusted Operating Profit From Adjusted Operating Profits to IFRS Profit After Tax (£m) H1 2023 H1 2024 Revenues 496 499 Management Cost (394) (388) Asset Performance fees 11 13 Investment income and minority interest1 5 5 Total Asset Management AOP 118 129 PruFund UK 119 96 Wealth Platform and Advi
Slide 33: Adjusted Operating Profit: Additional details
Adjusted Operating Profit Additional details (£m) H1 2023 H1 2024 Asset Management H1 2023 H1 2024 Revenues 496 499 Investment income 13 13 Costs (394) (388) Minority interest1 (8) (8) Total 5 5 Performance fees 11 13 Investment income and minority interest1 5 5 Total Asset Management AOP 118 129 H1
Slide 34: Adjusted Operating Profit: Asset Management by asset class
Adjusted Operating Profit Asset Management result by asset class End of period AUM (£bn) Fee margins1 (bps) Revenues and costs (£m) Performance 11 11 13 fees 57 308 313 55 Investment income 303 53 (12) 5 5 and minorities2 320 303 313 CIR with/without 78 73 Average end 74% / 75% 78% / 79% 76% / 77% 7
Slide 35: Key drivers of CSM movements
Key drivers of CSM movements PruFund, Traditional With-Profits, and Annuities Traditional WP Traditional WP PruFund Annuities Other1 Shareholder Policyholder H1 2023 H1 2024 H1 2023 H1 2024 H1 2023 H1 2024 H1 2023 H1 2024 H1 2023 H1 2024 Opening CSM 1,666 1,614 1,466 1,342 664 652 1,206 1,221 260 65
Slide 36: Operating Capital Generation
Operating Capital Generation H1 2023 H1 2024 (£m) Own Funds SCR Total Own Funds SCR Total Asset Management 101 18 119 118 0 118 PruFund UK 156 (53) 102 108 (24) 84 - of which: In-force 115 3 118 99 20 119 - of which: New business 40 (56) (16) 9 (44) (35) Platform and Advice (19) 1 (17) (6) 3 (3) Oth
Slide 37: Assets Under Management and Administration
Assets Under Management and Administration Our asset base as an Asset Owner and an Asset Manager More details on the following page Group View: £346bn AUMA Asset Owner view3 Asset Manager view 2 Corporate Assets1 32 Other Group Assets £313bn With-Profits Fund 99 Life Assets managed and £129bn 191 ad
Slide 38: Assets Under Management and Administration by asset class, client, geography
Assets Under Management and Administration Asset Management view split by asset class, client, and geography Diversified capabilities A successful external franchise Established footprint2 strong scale in private assets and a supportive internal client with opportunity to grow Impact and Private Equ
Slide 39: Group wide flows, market and other movements
Assets Under Management and Administration Group wide flows, market and other movements – YE 2022 to H1 2024 Net client Market / Net client Market / Net client Market / YE 2022 Inflows Outflows flows Other H1 2023 Inflows Outflows flows Other YE 2023 Inflows Outflows flows Other H1 2024 (£bn) Asset
Slide 40: Wholesale Asset Management: Mutual funds performance
Wholesale Asset Management Mutual funds performance Mutual funds performance as of YE 2022, YE 2023 and YE 2024 (as % of AUMA) 16 39 38 43 45 46 45 48 56 48 21 24 6 23 22 18 20 13 15 32 9 7 17 23 26 32 31 25 25 26 21 17 13 5 4 1 YE-22 YE-23 HY-24 YE-22 YE-23 HY-24 YE-22 YE-23 HY-24 5-year 3-year 1-y
Slide 41: Wholesale Asset Management: Largest SICAV and OEIC mutual funds
Wholesale Asset Management Largest SICAV and OEIC mutual funds AUMA and Flows (£bn) RANK MARKET/ PRODUCT ASSET CLASS FUND YE 2023 SALE REDEMPTION NET FLOWS H1 2024 by AUMA OTHER 1 OEIC + SICAV Bonds Optimal Income 9.69 1.52 (1.69) (0.17) (0.24) 9.28 2 OEIC + SICAV Equities Global Dividend 4.69 0.35
Slide 42: Wholesale Asset Management: Largest SICAV mutual funds
Wholesale Asset Management Largest SICAV mutual funds AUMA and Flows (£bn) RANK MARKET/ PRODUCT ASSET CLASS FUND YE 2023 SALE REDEMPTION NET FLOWS H1 2024 by AUMA OTHER 1 SICAV Bonds Optimal Income 8.29 1.31 (1.45) (0.14) (0.23) 7.91 2 SICAV Equities Global Dividend 2.59 0.21 (0.39) (0.18) 0.22 2.63
Slide 43: Wholesale Asset Management: Largest OEIC mutual funds
Wholesale Asset Management Largest OEIC mutual funds AUMA and Flows (£bn) RANK MARKET/ PRODUCT ASSET CLASS FUND YE 2023 SALE REDEMPTION NET FLOWS H1 2024 by AUMA OTHER 1 OEIC Equities Japan 2.28 1.18 (0.31) 0.87 0.19 3.34 2 OEIC Equities Global Themes 2.31 0.04 (0.14) (0.10) 0.05 2.25 3 OEIC Equitie
Slide 44: With-Profits Fund: Strategic Asset Allocation
With-Profits Fund Strategic Asset Allocation Asset allocation evolution between 2013 and H1 2024 Asset allocation as of 30 June 2024 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Equities Real Estate Alternatives Fixed Income LEGEND UK Asia e
Slide 45: With-Profits Fund: Historical returns
With-Profits Fund Historical returns Annualised 5-year rolling returns1 PruFund Growth returns vs. peers PruFund Growth returns after charges (% returns above capital invested)2 143% 25% Cash SONIA Cumulative Rate 20% UK RPI Cumulative Rate PruFund Growth Fund 94% ABI Mixed Investment 20-60% shares
Slide 46: Solvency II: M&G Group position
Solvency II M&G Group position H1 2024 (£bn) Shareholder view With-Profits Fund view Regulatory view 10.8 2.1 Surplus = 4.6bn 6.2 Surplus = 4.6bn Surplus = 6.8bn 2.1 8.7 8.9 8.7 4.1 4.1 2.1 Own Funds SCR Own Funds SCR Own Funds SCR Solvency ratio 210% Solvency ratio 429% Solvency ratio 173% Note: Al
Slide 47: Solvency II: Sensitivities
Solvency II Sensitivities and estimated impact on % ratio and surplus Shareholder Solvency II market sensitivities With-Profits Solvency II market sensitivities HY 2024 HY 2024 Solvency ratio Surplus Solvency ratio Surplus (%) (£bn) (%) (£bn) Base Shareholder position 210 4.6 Base With-Profits posit
Slide 48: Solvency II: Breakdown of the Shareholder SCR by risk type
Solvency II Breakdown of the Shareholder SCR by risk type H1 2024 9.7 (£bn) 0.6 Sectoral Operational & 2.2 expense 0.5 Lapse Longevity 1.1 1.1 Currency 4.1 Credit 1.3 (5.6) 0.4 Interest rate Property 0.8 1.7 Equity Undiversified SCR Diversification, SCR deferred tax, and other 48
Slide 49: Solvency II coverage and leverage ratio
Solvency II coverage and leverage ratio Leverage shown also on a IFRS17 basis Solvency II coverage ratio Leverage ratio Solvency II IFRS 17 HY 2024 HY 2024 10.6 Nominal 8.7 8.7 value of 2.8 debt £4.6bn 4.4 210% surplus 26% CSM net 32% of tax1 4.1 4.1 0.6 Sectoral 2.8 2.8 Present Value of Shareholder
Slide 50: Credit quality of the Shareholder Annuity book remains very strong
Credit quality of the Shareholder Annuity book remains very strong 99% of the £13bn1 assets is investment grade Breakdown by rating Breakdown by capital ranking Outer circle shows H1-24, inner YE-23 Outer circle shows H1-24, inner YE-23 • Our diversified and actively managed Annuity portfolio 1% 11%
Slide 51: Financial debt structure
Financial debt structure Subordinated debt (all Tier 2) ISIN Currency Nominal Coupon Issue Date Maturity Date Call Date XS1888930150 USD 500 6.500% 2018 2048 2028 XS1888920276 GBP 750 5.625% 2018 2051 2031 XS1243995302 GBP 439 5.560% 2015 2055 2035 XS1003373047 GBP 700 6.340% 2013 2063 2043 XS188892
Slide 52: Parent company liquidity
Parent company liquidity Cash and liquid assets at £0.9bn Parent company cash and liquid assets H1 2024 (£bn) 0.5 1.0 (0.3) 0.9 (0.3) FY 2023 Cash remittances from subsidiaries Corporate costs and other Cash dividends and shares HY 2024 movements 1 purchased by EBT 2 1. Includes repurchase of £161m
Slide 53: Our international footprint
Our international footprint 2 Corporate Assets £346bn AUMA 92 22 47 UK 38 locations £254bn 7 91 27 Europe 26 markets 32 £65bn 3 10 1 Middle East Asia-Pac 2 & Africa £13bn £11bn Americas £3bn 3 8 Wealth Life Wholesale Asset Management Distribution, operations Institutional Asset Management and invest
Slide 54: Investor Relations contacts
Investor Relations contacts Luca Gagliardi Maria Baines Director of Investor Relations Investor Relations Event Manager +44 (0)20 8162 7301 +44 (0)20 8162 6122 +44 (0)752 559 7694 +44 (0)781 020 3731 luca.gagliardi@mandg.com maria.baines@mandg.com Simran Parmar Amrita Jairaj Head of Investor Relatio