M&G makes corporate pensions insurance comeback as profit jumps

By Carolyn Cohn

LONDON (Reuters) -British insurer and asset manager M&G announced its comeback in corporate pension scheme insurance on Wednesday as it reported an above-forecast 31% rise in adjusted operating profit, boosting its shares.

M&G, which split off from Prudential in 2019, pulled out of the market for bulk annuities - insuring corporate defined benefit, or final salary, pension schemes - in 2015, chief executive Andrea Rossi told Reuters.

The company was re-entering the market because it "became much, much larger - we thought we could selectively play there", he said.

Pensions consultants predict record volumes in bulk annuities this year, as higher interest rates have pushed pensions schemes into surplus and made bulk annuities more affordable.

Eight other insurers, including Legal & General, Aviva and Phoenix, are active in this market.

Phoenix CEO Andy Briggs told Reuters this week that several 10 billion-plus pound pension schemes were enquiring about deals.

M&G said it had transacted two bulk annuity deals so far, one for the company's own pension scheme, with a combined premium of 617 million pounds ($761.50 million).

"We are not going to go after the big deals," Rossi said.

Jefferies analysts described the move into bulk annuities as "a positive development", reiterating their "buy" rating.

M&G's shares were up 2.7% at 0802 GMT, compared with a 0.44% rise in the FTSE 100.

First-half adjusted operating profit came in at 390 million pounds against a consensus analyst forecast of 284 million pounds.

The company said it was on track to achieve its target of generating 2.5 billion pounds of operating capital by end-2024 and was making good progress on its 2025 financial targets.

Assets under management and administration totalled 333 billion pounds at end-June, down 3% this year and against a forecast 339 billion.

Global equity funds drew large inflows last week as investors eye an end to rate rises. But UK asset managers have seen mixed results in the first half in an uncertain market.

M&G said it would pay an interim dividend of 6.5 pence per share, up 5%.

($1 = 0.8102 pounds)

(Reporting by Carolyn Cohn, editing by Sinead Cruise and Tomasz Janowski)