M&G (LON:MNG) outlined what it described as strong progress against its strategy during its full-year 2025 results call, pointing to record net inflows, continued international expansion, and a further shift toward fee-based, “capital-light” growth in its Life business. Management said the group’s focus in 2026 will turn more explicitly to translating sales momentum into higher operating profits.
Record inflows and broader international footprint
Chief Executive Officer Andrea Rossi said 2025 marked the year when investment for growth “paid off” through “excellent momentum on sales and record net inflows across both asset management and life annuities.” He highlighted £7 billion of net inflows from external clients in asset management, which he said represented nearly 4.5% of opening assets.
On group scale, Rossi said assets under management rose to £345 billion (with £81 billion in private markets), and third-party clients now accounted for “over half” of total assets. CFO Kathryn McLeland later said closing AUMA stood at £376 billion, reflecting net inflows, market movements, and the acquisition of P Capital Partners.
Asset management: mix-driven momentum, private markets demand
M&G said net inflows accelerated in the second half, including £1.4 billion of net inflows from UK institutional clients. Rossi said headwinds from UK defined benefit pension schemes had eased since 2023, and while the company remained cautious about long-term prospects for the segment, it did not expect it to be a “material drag” going forward.
Rossi said international expansion continued to be a “real success story,” with assets outside the UK nearly doubling over six years to £107 billion. He added that nearly 60% of external assets came from international clients and that institutional clients globally had grown from around 800 to over 1,000 over three years.
Management repeatedly pointed to private markets and equities as key contributors to 2025 flows:
- Private assets net inflows of £3.9 billion, lifting private markets AUM to £81 billion.
- Equities net inflows of £5.6 billion, which Rossi called a “stellar achievement.”
- An £8.2 billion capital queue in private markets, which management said had grown across private credit (including structured credit) and real estate.
McLeland said asset management fee-related earnings increased 12% year-over-year (up £27 million) driven by higher average assets and resilient margins. She said the business delivered £23 million of net new annual revenues from 2025 flows, supporting top-line growth. M&G’s average fee margin was described as resilient at 33 basis points, while the asset management cost-to-income ratio improved to 75%. Rossi said he expected margin “resilience” rather than further increases, even with mix benefits.
Operating profit in asset management declined by £9 million year-over-year due to lower performance fees and investment income, according to the CFO.
In the Q&A, Asset Management CEO Joseph Pinto said the firm had less than £1 billion in ELTIF exposure in private credit and emphasized strict European regulation, including “no leverage.” Management said the majority of that ELTIF capital was from internal clients (described as a stable investor base). Rossi and Pinto also drew distinctions between Europe and the U.S. private credit markets, with Rossi saying M&G’s exposure to software within its private credit book was “extremely limited” (less than 2%) and citing default rates below broader market levels.
Life: PruFund inflows return, BPA scaling, and fee-based shift
Rossi said Life momentum improved in 2025, including scale-up in the bulk purchase annuity (BPA) market with £1.5 billion in sales. He said the company closed 11 deals and “doubled our market share,” adding that deals were written at attractive return levels, delivering “double-digit IRRs above our cost of capital.”
He also said PruFund returned to consistent net inflows in the second half, with net inflows “over £400 million” and seven consecutive months of positive net flows since June. McLeland added that second-half PruFund gross inflows rose nearly 28% versus the first half to £3.6 billion, with £400 million of net inflows.
Management detailed several distribution and product initiatives tied to PruFund, including integrating PruFund on FNZ technology and launching on the first FNZ platform in Q2. Rossi said this integration covers roughly 40% of the UK’s estimated £700 billion digital platform market, with plans to add more platforms before year-end. M&G also launched a retail fixed-term annuity in 2025 and expects to launch a lifetime version in 2026. Rossi also noted an agreement with Zurich Insurance Group to distribute a PruFund-like proposition in the UAE.
A key strategic message was the move of with-profits new business to a fee-based model. Rossi said nearly all new Life business will be written by the with-profits fund, and that products including with-profits BPA, PruFund, and retail annuities would operate on a fee-based model. M&G expects these products to grow to at least £50 billion in assets by 2030, with the group providing admin and investment services for fees. McLeland described guidance of 10–15 basis points of profit on those new products, alongside asset management fees currently around 20 basis points.
Financial results, capital, and dividend
McLeland reported group-adjusted operating profit of £838 million, which she described as stable year-over-year. She said asset management fee-related earnings rose 12%, while Life profits increased 2% to £764 million as higher contributions from PruFund and traditional with-profits offset lower annuity earnings. She said corporate center results deteriorated by £8 million due to lower investment income.
M&G reported after-tax profit of £314 million, compared with a £347 million loss in 2024. McLeland also said 73% of operating profit now comes from “capital-light businesses,” and that proportion is expected to rise.
On capital, operating capital generation was £765 million, with £928 million excluding new business strain. McLeland said the higher strain reflected strong BPA volumes, including £134 million deployed to support the £1.5 billion of new BPAs. M&G’s Solvency II ratio was 242%, with surplus increasing to £5 billion. Management said proposed government changes to ground rents were expected to have a modest impact of less than 3% on the solvency ratio, and the group guided to a “very modest” operating profit impact of £10–£15 million in 2028.
The company declared a total dividend of 20.5 pence per share for 2025, a 2% increase year-over-year. Rossi said the group would consider targeted investments for simplification and potential bolt-on acquisitions, while emphasizing disciplined capital deployment and adoption of AI to improve productivity and customer outcomes.
Looking ahead, management reiterated targets including average profit growth of at least 5% between 2025 and 2027 and an asset management cost-to-income ratio of 70% by 2027. Both Rossi and McLeland said 2026 should show a “meaningful” improvement in operating leverage and profitability as prior growth investments begin to flow through to earnings.
About M&G (LON:MNG)
M&G plc is a leading savings and investments business, managing investments for both individuals and for large institutional investors, such as pension funds, around the world.
We have a single corporate identity, M&G plc, and two customer-facing brands: Prudential and M&G Investments. Prudential offers savings and insurance for customers in the UK and Europe and for asset management in South Africa. M&G Investments manages assets for clients globally.
With roots stretching back more than 170 years, we have a long history of finding innovative solutions for our customers’ changing needs.
