M&G plc (MGPUF) Q4 2024 Earnings Call Transcript

2025-03-19 22:50:29 ET

M&G plc (MGPUF)

Q4 2024 Earnings Call

March 19, 2025 05:30 ET

Company Participants

Luca Gagliardi - Investor Relations

Paolo Rossi - Chief Executive Officer

Kathryn McLeland - Chief Financial Officer

Clive Bolton - Chief Executive Officer, M&G Life Insurance

Joseph Pinto - Chief Executive Officer, M&G Asset Management

Conference Call Participants

Nasib Ahmed - UBS

Farooq Hanif - JPMorgan

Abid Hussain - Panmure Liberum

Thomas Bateman - Mediobanca

Andrew Baker - Goldman Sachs

Dom O’Mahony - BNP Paribas Exane

Andy Sinclair - Bank of America

Andrew Crean - Autonomous

Larissa Van Deventer - Barclays Capital

Presentation

Luca Gagliardi

Good morning, everyone, and welcome to M&G’s 2024 Full Year Results Presentation. Today, as usual, we’ll have Andrea and Kathryn going through the results, but they will also be joined by Clive Bolton and Joseph Pinto, the CEO of our Life and Asset Management businesses, respectively. So it’s going to be slightly longer than usual, but don’t worry. We’ll keep it still short and crisp to about 45 minutes, 50 minutes. And then after that, we’ll move on to Q&A. So without further ado, Andrea?

Paolo Rossi

Thank you. Good morning, and welcome to M&G’s full year results. It is a pleasure to be here with you. Today, I am joined by Kathryn, who will cover our strong financial performance; and by Joseph Pinto and Clive Bolton, who run our Asset Management and Life segments, respectively. They will share more color on the progress being made and explain the contribution of our business to the growth ambition for M&G and how we are collectively delivering for our clients. But first, let me start with a review of our main achievements. In 2024, we delivered meaningful progress across our three strategic priorities. First, on financial strength, by generating over £900 million of capital, we beat our upgraded OCG target. This allowed us to reduce debt and to increase the dividend cash spend for the first time since we listed in 2019. Given our recent achievements and our confidence in the outlook of the business, I am delighted to announce that from today, we are moving to a progressive dividend policy.

Second, on Simplification. We moved at pace on our transformation efforts, delivering £188 million of savings in the first 2 years of the program. Given this progress, we are upgrading our cost target again to £230 million by the end of 2025. And let me be clear, we will continue to tackle costs even after we achieve this target. Our focus on cost discipline is also clear in Asset Management, where despite inflationary pressures and investments for growth, we reduced absolute costs by 2% and the cost-to-income ratio by 3 percentage points. All this while decommissioning legacy IT systems and improving client outcomes.

And finally, on growth. Group operating profit was up 5% year-on-year, driven by the strong asset management result, which improved by nearly 20%. I’m very pleased that we achieved this growth while further internationalizing the business and expanding our private markets capabilities. In Life, we continued to build our presence in the BPA market and launched our new value share proposition. We increased new business volumes by 50%, reached nearly £900 million of premiums and offset the runoff of the in-force book. When I started at M&G, the immediate priority was to strengthen the foundations of the business.

Despite a challenging environment, we have done this. While we can always go further by fixing the fundamentals, we can now focus more on delivering sustainable growth to our shareholders. We are now ready to grow, and we will do so with discipline. First, financial discipline, maintaining a strong balance sheet. Secondly, operational discipline, continue tackling costs and improve our operating leverage. And finally, with a clear commitment to profitable growth across both asset management and life to underpin a progressive dividend.

Only a couple of years ago, M&G had an asset manager with shrinking earnings, inefficient wealth operations and a legacy insurer in runoff. Now we operate an integrated, balanced and synergistic business model, one where the success in the asset manager is built in conjunction with the success of the life insurer. This business model is our competitive advantage. It is what differentiates us, what gives us confidence in the long-term prospects of M&G. Today, we combine an international active asset manager and a scaled Life business, bringing together strong investment capabilities with long-term capital. With £185 billion of assets, our life operations provide scale and seed funds to the asset manager. Our asset manager then leverages this to foster innovation and expand our business with external clients and internationally.

With over half of the asset manager AUM coming from third parties, of which the majority are based outside the U.K., we have already proven that this model delivers real value. It is a model not dissimilar to many U.S. alternative asset managers and our £74 billion private markets franchise proves exactly that. We now have established capabilities in real estate, private credit and impact investing. And what gives us a unique advantage and will help fuel long-term growth is the With-Profit fund....

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