Pru's M&G in sales boom on bond bonanza

A MASSIVE increase in demand for corporate bonds has allowed M&amp;G, the asset management arm of insurance group Prudential, to notch up record levels of investment into its fund range.<br /><br />Prudential&rsquo;s results for the first quarter showed M&amp;G saw gross fund inflows of &pound;4.4bn thanks mostly to a tide of investment away from current accounts, which are now delivering record-low returns, and into the bond space.<br /><br />The group said that, taking all the client withdrawals over the period into account, the net inflow into its fund range was &pound;2.5bn, which represented a record fourfold increase compared to the same quarter of 2008.<br /><br />Finance director Tidjane Thiam, set to take over from chief executive Mark&nbsp;Tucker in October, said the &ldquo;outstanding&rdquo; inflows show the arm is going &ldquo;from strength to strength&rdquo;.<br /><br />The overall Prudential group reported total insurance sales of &pound;697m, beating analyst expectations of &pound;647m, in the quarter although this represented a five per cent fall on same quarter in 2008.<br /><br />Asian sales, which represent over half of the group&rsquo;s profits, fell by 11 per cent to just &pound;333m with Prudential blaming exceptionally bad conditions in key markets, including Korea and Hong Kong.<br /><br />Thiam said the group is focusing on remaining defensively positioned in the recession. And he refused to rule out rumours he may split off the group&rsquo;s UK arm when he takes over as chief executive.<br /><br />Charles Stanley analyst Nic Clarke retained his &ldquo;hold&rdquo; recommendation on the stock: &ldquo;We believe that compared to other stocks in the UK life assurance sector the Pru&rsquo;s performance is likely to be volatile over the next 6 to 12 months,&rdquo; he said.<br /><br />Prudential added it had a capital surplus of &pound;2bn at the end of the first quarter, compared with &pound;1.7bn pounds three months earlier, and it expects that figure to rise further to a healthy &pound;2.8bn by the summer.