M&G Prudential is born: Insurer to merge insurance and asset management arms

 
Oliver Gill
Follow Oliver

Prudential is to merge its UK and Europe asset management and insurance arms, forming M&G Prudential, the FTSE 100 group announced this morning.

The combined business will manage some £332bn of assets for over 6m customers.

Prudential chief executive Mike Wells said the two businesses "have a long history of collaboration and we are fortunate to have two highly respected brands".

He added: "Combining these businesses will allow us to better leverage our considerable scale and capabilities."

The shake-up came as Prudential posted five per cent rise in first-half operating profit to £2.36bn. Boosted by further growth in Asia, the firm beat expectations of £2.2bn. Dividends, however, were in line with what analysts had pencilled in, up 12 per cent to 14.5p per share.

Shares in the firm were comparatively unsettled in response, falling by 0.46 per cent by 10.30am.

"Our strategy is focused on markets where the need for our products is strong and growing, and our capabilities and execution ensure that we are successfully meeting that demand across our different regions," said Wells.

Read more: Prudential share price jumps on record operating profits

Split

For around a decade City onlookers have questioned whether Prudential should split itself between its mature European operations and its fast-growing Asian division.

In recent months investors indicated management had been warming to the idea.

John Foley, currently chief executive of Prudential UK and Europe, will head the merged operations. Anne Richards will remain chief executive of M&G and together with Clare Bousfield, the insurance boss for Prudential UK and Europe, will become deputy chief executives of M&G Prudential.

Prudential bought M&G for £1.9bn in 1999 but its asset manager, which launched Britain's first unit trust in 1935, has historically been run independently of the insurer.

Jason Hollands of Tilney Investment Management said: "With the near complete merger of Standard Life and asset management giant Aberdeen and the earlier deal combining Janus and Henderson, this is the latest evidence of that the tectonic plates are shifting in UK financial service and that the market is developing towards the creation of a small cluster of super-groups that have both broad manufacturing capabilities across asset classes and significant distribution."

Read more: Prudential boss thinks people are still confused about Asia