M&G (LON:MNG) reported its strongest first-half operating result since listing in 2019, as growth in asset management and with-profits life products helped offset a volatile macroeconomic backdrop.
Group adjusted operating profit rose 15% year over year to £435 million for the first six months of 2026. Chief Executive Officer Andrea Rossi said the result reflected a 24% increase in asset management profit and double-digit growth in PruFund, the company’s with-profits investment proposition.
Flows and assets under management
Net flows from open business totaled £2.4 billion, up £300 million from the prior-year period. Asset management generated £2.2 billion of those inflows, split equally between wholesale and institutional clients, while Life recorded £200 million of net inflows.
Closing assets under management and administration reached £387 billion, supported by the net inflows and £13 billion of positive market movements. Within asset management, assets under management rose to £356 billion, up £32 billion from the previous year.
Rossi said the asset management business has become more diversified geographically and by client base. External assets rose 29% over the past three years to £189 billion, while international operations expanded by more than 40% and now represent nearly 60% of external assets.
The company also reported a further £1 billion of asset management net inflows in July. It cited demand across public and private market strategies, including structured credit, real estate, infrastructure and public equities. M&G said it had a £7.8 billion private-markets capital queue.
- Wholesale net inflows totaled £1.1 billion in higher-margin solutions.
- U.K. institutional clients produced £800 million of net inflows.
- Net flows generated £13 million of annualized net new revenue.
- Average asset management fee margin remained at 32 basis points.
Asset management profit and efficiency
Asset management adjusted operating profit increased 24% to £159 million, driven by a higher asset base, recurring revenue growth and improved operating leverage. Revenue increased 10% during the first half, while costs rose 7% year over year to £470 million but were flat compared with the second half of 2025.
The asset management cost-to-income ratio improved by two percentage points to 73%, marking the third consecutive annual improvement, according to Chief Financial Officer Kathryn McLeland. The company reiterated its target of reaching a 70% ratio by the end of 2027.
Rossi said M&G’s focus on high-value investment solutions was supporting the quality of flows, while the company continued to invest in distribution and investment capabilities. He said artificial intelligence initiatives were helping accelerate processes including bulk purchase annuity pricing, institutional-client requests for proposals and customer servicing.
“It will support your growth at lower unit costs,” Rossi said of the company’s AI efforts, while noting it was too early to quantify returns.
With-profits strategy drives Life growth
Life operating profit increased 9% to £375 million. PruFund operating profit rose 15% to £129 million, while traditional with-profits profit grew 14% to £137 million. McLeland said the businesses were supported by a combined contractual service margin, or CSM, of £4.2 billion.
Annuity profit declined 7% to £105 million, reflecting lower expected returns on surplus assets. M&G said this was partly offset by higher CSM release and improved experience variances.
The company has shifted nearly all new Life business into its With-Profits Fund, which it described as a capital-light model with limited shareholder balance-sheet exposure. Its BPA+ bulk purchase annuity product, introduced in February, generated £600 million of sales in the first half, followed by £1.1 billion of transactions completed in July and August.
Rossi said BPA+ sales reached £1.7 billion during the first eight months of 2026, already above the £1.5 billion of annuity volume reported for all of 2025. M&G expects BPA sales to rise at least 50% this year and is targeting annual BPA volumes of £3 billion to £4 billion in 2027.
The company said it expects with-profits solutions, led by PruFund and BPA+, to attract at least £50 billion of assets by 2030 and generate at least £100 million of annual operating profit across Life and asset management by that point.
M&G also highlighted retail momentum. PruFund and fixed-term annuity retail net flows improved by more than £500 million year over year. Its fixed-term annuity product, launched last summer, generated more than £100 million in net inflows in its first 12 months.
Capital generation and balance sheet
Operating capital generation before new-business strain was £392 million, while total operating capital generation was £372 million. The latter was £36 million lower year over year, largely due to changes in capital requirements in asset management and the corporate center.
New-business strain improved to £20 million from £35 million a year earlier despite higher BPA volumes, which McLeland attributed to the capital-light structure of BPA+. Management actions contributed £68 million, primarily from equity hedging activities. M&G maintained its annual guidance for management actions of £100 million to £200 million and said it remained on track for its cumulative £2.7 billion capital-generation target.
The Solvency II ratio stood at 247% at the end of June, with a £5 billion capital surplus. Own funds totaled £8.4 billion and included £4.8 billion of the present value of future shareholder transfers from the With-Profits Fund.
Management said it expects to operate above its stated solvency target range over the medium term because of the value and growth of the with-profits business. Rossi said the company’s capital-management priority was currently growth investment, while dividend decisions remain a matter for the board. He said M&G was comfortable with market expectations for dividend-per-share growth.
M&G also said Dai-ichi Life had become its largest shareholder with a 15.7% stake. The partnership has allocated more than £1 billion to M&G investment strategies, and Dai-ichi executive Hitoshi Yamaguchi joined M&G’s board effective immediately.
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.
