M&G plc

Good morning, everyone, and welcome to M&G's 2024 full-year results presentation. Today, as usual, we'll have Andrea and Catherine going through the results, but they will also be joined by Clive Bolton and Joseph Pinto, the CEO of our live 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.

Thank you. Good morning, and welcome to MNG's full year results. It is a pleasure to be here with you. Today, I am joined by Catherine, who will cover our strong financial performance, and by Joseph Pinto and Clive Bolton, who run our asset management and live 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 spent 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 two 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 profits 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 UK, we have already proven that this model delivers real value. It is a model not dissimilar to many US 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-profits fund. Let's just get a little bit of water. It's the voice. Sitting with life, it is a business within a business. with its own ring-fenced balance sheet and nearly six billion of surplus capital ready to be deployed. Using this resource effectively means gathering assets and diversifying earnings without adding risk onto our balance sheet, but instead complementing the shareholder risk appetite. We have a winning business model, and we are clear about what we want to achieve. Thanks to the support and seed capital from the live business, we will continue to grow in asset manager and expand our presence in private markets, focusing on high value areas of structural growth. And bringing together our investment capabilities and with profits capital, we are developing new insurance solutions that will drive funds into the asset manager. After being in runoff for nearly a decade, we are turning our life operations into a growth operation engine for the group. Combining a thriving asset manager with a thriving life insurer means we will deliver more resilient and differentiated earnings, both in the UK and internationally. Our business model also means that we can address opportunities that others cannot tackle as effectively. On this page, you can see some of the key dynamics of our industry. Clients, in particular retail savers, are still under allocated. The rate environment has changed dramatically and investors are still adjusting to it. And finally, in these uncertain times, clients want to partner with asset managers that are experts at what they do, but that also have skin in the game and are aligned to their goals. Working together, our business can capitalize on these trends. Our recent Bolton acquisitions are a good example of this, as they were enabled by the unique setup of our group. We added two high-quality teams that complement the asset management, private markets capabilities, and fit the strategic asset allocation of the light business. With Beaumont and P Capital partners, we can access fast-growing segments in real estate and private credit, where we will rapidly scale, also thanks to the 850 million euros of seed capital from life. But there is more we are doing to combine our asset management and life capabilities. The launch of the value share BPA and of fixed-term annuities means we now have client propositions that suit any rate environment and include guaranteed, smoothed and unsmoothed solutions. It also means that here in the UK, we can offer defined benefit pension schemes all the services they need across the de-risking journey. And when we work with clients, they know they access the same solutions we use. ourselves. Very often, we co-invest in the same strategies, aligning our interests with theirs. This builds mutual trust and creates long-lasting partnerships. Through our business model, we are well positioned to serve clients and to grow. And with that, I will hand over to Joseph, who will outline the progress we have made in asset management.

Thank you, Andrea, and good morning, everyone. I'm delighted to be with you today and to talk about what we are doing in asset management to support the growth of the group and address our client needs. Let me start with our clear ambition, which is to be one of the leading active asset managers in Europe with strong and growing private market capabilities. This is a high margin area of structural growth where we already have a strong presence and track record. As Andrea has already explained, M&G's business model is a key competitive advantage as we deliver on our ambition. For over 20 years, we've been developing new investment capabilities thanks to seed capital from the live business. Our focus is to further build on this successful partnership as we then externalize and scale the solutions that we create to serve our internal clients. This synergistic relationship drives innovation and fuels growth. On this page, we also show our priorities. Investment excellence is the core objective of any active asset manager. As we maintain our current strong performance, we are expanding both our distribution reach and investment capabilities. Growing internationally and in private assets are clear opportunities for us. But at the same time, we also need to protect our home market here in the UK. Let me go through these points in a bit more details, starting with investment performance. So delivering excellent client outcomes is our number one priority. Putting client needs at the core of what we do and fulfilling those needs is the very reason we exist. This is why I'm very pleased that we have achieved strong investment performance over a sustained period of time. This is true for our institutional franchise, with over 75% of our assets outperforming their benchmark. But also true for wholesale, where, according to UBS research, we have delivered the best investment performance across listed European peers for more than two years now. Behind this strong performance, there are strong investment teams. And we continue to invest in them and attract top talents. Andrew Charlton and Emmanuel Doblan have recently joined us to lead our investment teams together with Fabiana Fedeli. Their experience will support our efforts to further improve the quality of our proposition across public and private markets. So benefiting from strong investment performance, we have focused now on broadening our client reach. Our international development has been a clear success story. Over the past four years, despite continued market volatility, we've delivered consistently positive native flows outside the UK and have grown our international assets by 50% to nearly £90 billion. Today, we have an established and growing international presence with 56% of our third-party assets belonging to international clients. This gives us access to more markets and more growth opportunities. It also improves our financial resilience by diversifying our earning streams. You've heard from Andrea in the past how we have strengthened our distribution teams, particularly in Europe and in Asia. In parallel, we've also expanded our offering, making it more relevant to these clients. For example, we can now leverage our global credit platform after having added US capabilities in Chicago and Asian ones in Singapore. At the same time, we also built out our Asian equity and Asian real estate offerings. So with a more international distribution network and a more international product range, I'm confident we will continue to grow internationally. But growing internationally does not mean forgetting our home market, where today we manage 70 billion pounds of third-party assets and which remains a core focus of the group. Defined benefit-pension schemes are the largest client segment in the UK, but high rates meant that they have accelerated their de-risking journeys, moving to buyout or to simpler buy and maintain strategies. But while structural challenges remain, these headwinds are starting to abate for us at M&G. Today, we are less reliant on this segment than we were in the past, both because of its smaller scale and because of our successful diversification internationally and within the UK. Also, the emergence of RONON as a potential end game strategy for larger DB schemes, it is a clear opportunity we are actively targeting. Here, we can leverage our strong fixed income expertise combined with our life insurance capabilities. Together, we can help these schemes achieve greater certainty on their future cash flows by providing partial guarantees or underwriting key risks. Other segments of the UK market also offer opportunities for us. For example, most insurers and DC pension schemes want to increase their allocation to private markets, while local government pension schemes are keen to deploy capital in local investments. Our strong credentials in this space position us extremely well to win business here. Finally, the recent launches of our first LTAF vehicle and the UK Social Investment Fund will further support our efforts in the UK. I want now to expand on our private market capabilities. With 74 billion pounds of assets and 418 million of revenues across real estate, private credit, impact investing, and infrastructure, we already have one of the largest franchises in Europe, built gradually over 20 years of continuous collaborations with the internal clients. This fruitful long-term partnership clearly benefits from M&G's decision to reopen the annuity book 18 months ago. This brings fresh assets into the group, assets that require allocation to private markets and support further innovation. This said, while most of our private market strategies were originally seeded by the lab business, we successfully scaled them by attracting third party capital, which now accounts for 59% of the asset base. So consistently winning third-party business is testament to the quality of our offering. And it shows how much institutional investors value the opportunity to deploy capital alongside our internal clients. They know that we have real skin in the game and that our incentives are fully aligned with theirs. To accelerate growth in private markets, we've recently completed two Bolton acquisitions. So we targeted boutiques with investment philosophies aligned to ours and strong track records. In both cases, we pursued opportunity in asset classes where we already have a strong presence, but where we were missing specific strategies that benefit from strong client demand and positive market trends. In real estate, we have long been experts in the so-called core strategies that typically present a lower risk-return profile. Beaumont, on the other hand, is a specialist in the value-added space segment, an area where we see great opportunities given the recent dislocation in real estate markets. Similarly, P-Capital Partner brings an established track record in the non-sponsored lending space. This neatly complements our existing capabilities and allows us to tap into one of the fastest growing sectors within private credit. Furthermore, both firms add international sourcing capabilities, expanding our presence in Europe and supporting our efforts to attract international clients. As we have said many times before, all this was made possible by MNG's differentiated business model. These acquisitions are consistent with the strategic asset allocation of the life business, which has committed 850 million euros in seed funding. As I have hopefully made clear, our ability to leverage our own balance sheet to support growth and innovations remains one of our key competitive advantages. With that, let me hand over to Clive, who will outline how he's driving the life business.