London-based insurance giant Prudential said today that it plans to merge its asset management business, M&G, with its UK and European insurance business to create a combined business that will leverage the “scale, financial strength and complementary product and distribution capabilities” of the component operations.
The merger was immediately seen by industry observers as yet another example of how transparency-driven pressure on costs and the growth of the passive funds sector is forcing consolidation in the traditional active asset management industry. Similarities were seen with the recently-announced merger of Standard Life and Aberdeen Asset Management.
In a statement that coincided with the release of its first half results, Prudential said today that the combined entity would be called M&G Prudential.
The two parts of of this soon-to-be-combined entity currently manage around £332bn (US$430bn) in assets on behalf of more than 6 million investors located in the US and internationally, Prudential said. This is four times the total external assets it held nine years ago.
John Foley, currently chief executive of Prudential UK&E, will become CEO of M&G Prudential, while also remaining a member of the Prudential plc board, the Prudential statement noted. Anne Richards will remain M&G CEO, and also will retain her board seat.
Both she and Clare Bousfield, CEO Insurance for Prudential
UK&E, will become deputy CEOs of the new entity.
Operating profit boosted by Asia
Separately, Prudential reported its operating profit rose 15% on an actual basis to £2.36bn in the first half, driven by growth in in its Asian businesses.
To read the Prudential statement on the M&G Prudential merger plan on the company’s website, click here.
To read Prudential’s first half results statement, click here.
Below, an infographic published by Prudential today aims to explain why the company believes the merger of its M&G and Prudential operations makes sense.