M&G plc

Perfect, so we're live and welcome to M&G's 2026 half-year results. Welcome back after the summer is a very good set of results. So without further ado, I'll hand over to Andrea Rossi, our group chief executive officer.

Thank you, thank you. Good morning and welcome to M&G's 2026 half-year results. It is a pleasure to be here with you today. In the first six months of the year, we have made great progress on our strategy. Despite a volatile macro environment, we delivered good net inflows from open business and strong profit growth. I am excited to see how, day by day, our vision for M&G is translating into operational and financial delivery. So let me share with you the main highlights of the year so far. In 2023, we set three strategic priorities for M&G. First, we focused on financial strength and simplification to set up M&G for the long-term success. Now, we are delivering growth. 2025 was a good year for us, and this strong momentum continued into 2026. Operating profit of 435 million is our best half result since listing in 2019. It is up 15% year on year thanks to a 24% increase in asset management and double digit growth in proof fund. Our strategic pivot is paying off. with high quality capital light earnings now representing 80% of total earnings. And they will continue to grow thanks to the success of our with profits offering. Our new with profits BPA called BPA Plus is a prime example of this. Since its launch in February, we have completed 1.7 billion of sales already improving on last year's total annuity volumes. And whilst driving innovation in life, we continue to deliver strong asset management performance, with 2.2 billion net inflows in high-value solutions across public and private markets. As we have grown the business, we have also improved our profitability. In the first six months of the year, our asset management cost-to-income ratio reduced by two percentage points to 73%. and we expect further improvements in operating leverage as we continue to transform M&G. We have delivered over 250 million in savings since 2023 and will go further. We continue to simplify our business and free up capacity that we reinvest in products and services supporting long-term growth. Let's now review our financial targets. Here we continue to make steady progress as we reach the halfway point to our 2027 targets. Our commitment to shareholders is clear. To deliver strong capital generation, to improve the efficiency of our business and to drive sustainable earnings growth. And we are delivering. Capital generation is on track to achieve the 2.7 billion cumulative target. Our cost to income ratio improved to 73% and we achieved record operating profit of 435 million, up 15% year on year. In March, I told you that 2025 was a year of foundation building for M&G as we added distribution, product and investment capabilities. Now we are seeing the benefits come through. We are on track to deliver low double-digit profit growth this year as we continue to experience strong momentum with clients across the group. And the reason that I am confident we will continue to deliver is because we have a clear strategy and the right business model to win. Our ambition is to be Europe's leading integrated asset manager. To achieve it, we will scale across both asset management and life, with the growth of one segment reinforcing and compounding the growth of the other. Life gives asset management the scale and long-term capital it needs to develop high quality investment capabilities. In return, life benefits from this expertise, with access to alternative assets that are essential to back its core propositions, including proof fund and bulk purchase annuities. The balanced and synergistic nature of this model is reinforced by the With Profits Fund, which attracts insurance assets in a capital-light way, with limited shareholder balance sheet exposure. A real competitive advantage. Another important differentiator for M&G is our strategic partnership with Daiichi Life, one that builds on and leverages our business model. Like us, Daiichi also believes in the powerful combination of asset management and life. Fully understanding the value of M&G, Daiichi decided to invest in our group. Over the past year they have become our largest shareholder with a 15.7% position. I am delighted by the strength of our partnership and to announce that senior Daiichi executive Hitoshi Yamaguchi has joined our board of directors effective today. He brings more than three decades of leadership experience spanning international insurance and finance. By becoming Daiichi's preferred asset manager for Europe, we have gained access to a second large balance sheet, which has already allocated over one billion to our investment solutions. At the same time, we are actively exploring a number of joint business opportunities across asset management and life, including product co-development and distribution. Having covered the group highlights, I will now move on to our segments, starting with asset management. I am very proud of the progress we have made in our asset management business. Over the last three years, assets under management have grown steadily, increasing by 17% to $356 billion. and we have improved our diversification becoming less reliant on our internal clients and on the UK market. Over the same period external assets have increased by 29% to 189 billion with our international business increasing even faster by more than 40% and now accounting for nearly 60% of total external assets. We also remain disciplined on costs, translating higher volumes into better operating leverage. The cost-to-income ratio reduced to 73%, and fee-related earnings increased by 45%. And the outlook is bright. New business momentum remains strong, with net inflows of one billion in July alone. With good client demand, a 7.8 billion capital queue in private markets and new business from Daiichi, we are confident that we will continue to drive profitable growth in asset management. Another reason that supports my confidence is the quality of our flows. Net inflows of 2.2 billion in H1 correspond to 13 million in annualized net new revenues. This proves that our focus on high margin and high value solutions is delivering. Both our private and public markets team achieved good results. Within private markets, client appetite for structured credit remained very strong and we saw renewed interest in real estate. Infrastructure is another priority area for our clients, where we have strengthened our leadership team. Within public markets, equities continued to outperform thanks to great investment performance and a compelling offering across global, European and Asian strategies. When looking at flows from a client perspective, you see a similarly positive picture. Firstly, we delivered 1.1 billion of net inflows in high margin wholesale solutions. Secondly, we achieved net inflows in the UK institutional market for the second consecutive period. An important milestone as we turn around this segment. And while the UK remains a mature market, we continue to innovate. Later this month, we will launch our new CDI plus proposition, an innovative insurance backed solution designed to optimize the investment and hedging strategy of DB pension schemes in run on. Finally, we achieved net inflows with international institutional clients for a fourth year in a row. Europe has historically been the primary driver of our expansion, but now we have added new engines for growth. Establishing strategic partnership with high caliber institutions across Asia and North America, as you can see on this page. As mentioned earlier, I am very pleased with the quality of the performance of our asset management business, which gives me real confidence in its future. Let's now move to our life segment. Here, I want to start by reiterating why life is now a core driver of M&G's capital light growth. From this year, nearly all our new business in life is being written by the With Profits Fund. This means that we are gathering assets in a way that is capital light for shareholders and that carries limited risk and balance sheet exposure. We expect to attract at least 50 billion to the group by 2030 through these With Profits solutions. The chart in the middle of this slide gives you a rough indication of the breakdown, with Proof Fund and the recently launched BPA Plus driving the bulk of the volumes. These assets will generate at least 100 million of annual operating profit by 2030, emerging across life and asset management. While offering great shareholder outcomes, the With Profits Fund also delivers superior client outcomes. Our new BPA Plus has been a great success since its launch six months ago, and with good reason. Entering into a BPA transaction is the most important decision that pension trustees can make. It influences the lives of thousands of people for decades to come. When dealing with the With Profits Fund, trustees know that their members are protected by one of the best capitalized insurance companies in Europe. A mutual that has put client interest at the heart of everything it does for over 175 years. And they are getting a great deal too. The low cost of capital of the with profits fund makes its pricing attractive. And if the fund achieves good investment returns, it shares them with customers, declaring a bonus on top of their guaranteed income. You can see why our BPA Plus has a real edge in the UK BPA market. And we expect to scale our sales at least by 50% this year, remaining disciplined on pricing and to achieve our target volumes of 3 to 4 billion in 2027. And as we scale, we support our growth in asset management, in particular thanks to the significant allocation of BPAs to private markets. Within life, we are also making good progress on our retail strategy. Here we have two core objectives to drive sales. First, to improve the distribution of Proof Fund. And secondly, to broaden our proposition with other investments. Solutions. From a distribution perspective, we are pleased to have launched Proof Fund on Scottish Widows platform. We will add a second FNZ platform later this year. From a product perspective, last summer we launched our retail fixed-term annuity, which has generated over 100 million of net inflows in the first 12 months. A good start. In February, we declared our first bonus for this product, giving customers an uplift of an extra 45 basis points to their investments, on top of their guaranteed returns. Again, clear evidence of the value delivered by our with-profits solutions. Our sales in the first half reflect this positive momentum. When combining proof fund and fixed term annuities, our retail net flows improved by over 500 million year on year. And looking ahead, we expect proof fund to deliver improved inflows in the second half and are encouraged by the positive market reaction to our launch on the Scottish Widows platform. Before handing over to Katrin, I will briefly cover our group transformation. In March, we completed the first phase of our transformation program, achieving 250 million of savings. But there continue to be exciting opportunities ahead as we explore ways to make our business simpler and more scalable to deliver improved customer outcomes and long-term growth. AI plays a key role on this journey, improving personal productivity and transforming end-to-end processes. It changes how we serve our clients, how we operate and how we grow. On this slide, you can see some of the initiatives we are working on. Our advisors are now spending less time on admin and more time with the customers. We are faster and more accurate when pricing BPA new business, answering RFPs from institutional clients or addressing customer needs. Our research and asset sourcing teams have reduced their cycle times without compromising on quality. The core objective is always the same. To deliver a better customer experience, improve process efficiency, and free up resources which are redeployed on high-value activities that drive growth. So, to sum up. We have had a good first half with record operating profits, strong flows in asset management and new product launches in life. And as we grow, we are making M&G more diversified, resilient and capital light. Through cost discipline and business transformation, we are also freeing up resources to support our long-term ambition. We are delivering on our targets and are confident we will sustain this positive momentum in the second half. And with that, I will hand over to Kathryn who will take you through the financial results.

Thanks Andrea and good morning everyone. I'll now take you through the details of our H1 results which show steady momentum across the group and good progress against our targets. Covering first the key highlights. We delivered 2.4 billion of net flows from open business, an increase of 300 million pounds year on year. In asset management, we continue to grow across both our wholesale and institutional channels despite the volatile macro environment. In life, flows improved meaningfully on the back of higher annuities and pre-fund sales. Group adjusted operating profit increased by 15% year on year to £435 million, our best first half results since listing. And within it, asset management earnings increased by 24% thanks to higher recurring revenues and improved operating leverage. In life, a higher contribution from the capital light with profits business led to a 9% increase in profits. A 372 million pounds operating capital generation was 36 million pounds lower largely due to movements in our capital requirements in asset management and the corporate center. New business strain of 20 million pounds was 15 million pounds better year on year despite us delivering twice the volume of BPAs reflecting the capitalite nature of our new with profits BPA plus. So thanks to this good result, we remain on track to achieve our 2.7 billion capital generation cumulative target. Finally, supported by our strong operating performance, the Solvency II ratio reached 247%. So let's now turn to our flows. Closing AUMA stood at £387 billion, supported by £2.4 billion of net inflows from open business and £13 billion of positive market movements. With £2.2 billion, asset management accounted for the majority of net flows equally split across our wholesale and institutional channels. and this equates to 2.4% of opening AUMA from external clients on an annualized basis. And as you've heard from Andrew, we delivered another £1 billion of net inflows in July with good momentum across a range of public and private strategies. While we continue to grow internationally, supported by our strategic partnership with Daiichi Life, we're very pleased with the continued turnaround of our UK institutional segment, where we delivered net inflows of 800 million pounds. And thanks to our business model, we're very well-placed to support UK pension schemes along their entire de-risking journey, leveraging the capabilities of both asset management and life. Our new CDI Plus solution, which Andrea just mentioned, is an example of our product innovation for these clients. In wholesale, our strong investment performance, particularly in public equities, remained a key attraction for clients. Life net flows from open business of £200 million was a £700 million improvement year on year. and this reflects 500 million increase improved fund year on year and continued growth in the BPA market where we recorded 600 million in sales in the first half and activity has picked up over the summer as we completed a further 1.1 billion in BPA transactions across July and August. We're very pleased with our continued positive growth in net flows across M&G despite a volatile external environment as we deliver the products and solutions our clients want. Moving on now to profit. At £435 million, our operating profit in the first six months was up 15%, with the key features being firstly 24% higher earnings and improving operating leverage in asset management, supporting a steady reduction in our cost-to-income ratio. Secondly, a 9% increase in life profits to £375 million with double digit growth in both proof fund and traditional with profits more than offsetting an £8 million reduction in annuities due to lower returns on excess assets, which we flagged in March. And finally, the corporate centre outcome was adverse by £5 million, impacted by lower investment income and slightly higher head office expenses. Our operating profit is not just growing, it's also improving in quality as we increase the diversification of our business and pivot it to capital light sources. and today 80% of our operating profit comes from asset management and with profits capital light business and this proportion is up meaningfully from 73% last year and we expect it to rise further over time as we now write the vast majority of our annuity business through the with profits fund. So let us now look at each of our businesses in turn and starting with asset management. Our asset management business delivered a strong result with adjusted operating profit up 24% to 159 million pounds. This was driven by a higher asset base and resilient margins, generating much improved recurring revenues. At 356 billion, assets under management were up by 32 billion compared to last year, supported by sustained net inflows and favorable markets. Our average fee margin remained resilient at 32 basis points as we continue to expand our business with external clients focusing on high value solutions particularly in private markets. We're very pleased with the quality of our flows which generated 13 million pounds of annualized net new revenues. Together with a growing asset base, this contributed to revenue growth in the first six months of 10%. Costs of 417 million pounds increased by 7% year on year, but remained flat compared to the second half of last year. And this cost base reflects our investments to support long-term growth in asset management, as we added distribution and investment capabilities, including our acquisition of P Capital Partners. and as we grow we continue to improve our operating leverage. In H1 the cost income ratio reduced by two percentage points for the third straight year reaching 73% and we are confident that we can continue to improve our efficiency in the second half of the year and remain firmly committed to our 70% target by the end of 2027. Fee-related earnings, which are a key metric for us, were up by an encouraging 17%. Finally, the operating profit also benefited from a £13 million increase in investment income, mainly due to improved impact from FX revaluation given the stronger dollar. Given the business momentum we are seeing and by continuing to be disciplined on costs and reinvesting capacity into growth initiatives, we are confident that we will further deliver top line expansion and operating leverage. Let us now turn to our life business. Here, Profund's operating profit increased by 15% to £129 million, reinforcing its role as a growth engine within the group. And the main driver of this positive result was the higher opening CSM, which grew strongly in 2025, and a broadly stable amortization rate. The result of our traditional with-profits business was up by 14% year-on-year to 137 million, reflecting similar positive dynamics. We're encouraged by this performance, particularly what was achieved against the backdrop of lower expected returns and risk-free rates, which we previously highlighted. Both Profund and Traditional with Profits continue to provide resilient long-term earnings for the group underpinned by a combined 4.2 billion of CSM supporting the sustainability of our future profits. As you know, we switched two Profund products to a 100-0 charges less expenses approach from the 1st of April, which will accelerate profit recognition on your business. Let's now turn to annuities. Here, annuities profit was down 7% year on year to 105 million, reflecting the guidance given in March. Specifically, the lower expected returns on surplus assets, which reduced to 4.5 from 5.2% last year. And these headwinds were partly offset by a higher CSM release, supported by the longevity benefit we recognised in the second half of 2025 and improved experience variances due to the non-repeat of the £8 million headwind we flagged last year. This year, all annuity business was ridden by the With Profits Fund through our BPA Plus solution. The With Profit Fund retains roughly 80% of the economic interest after reinsuring around 20% to the shareholder balance sheet. In due course, as BPA Plus volumes grow, we will evolve our disclosures to share more details on the different contributions from each book of business. Turning to other life, where we generated a profit of £4 million, a turnaround on last year, primarily thanks to lower losses in our platform and advice business. Here we continue to reduce costs and improve the efficiency of our digital platform, including the outsourcing of our back office functions. Before moving on to capital generation, I would highlight the strength of our CSM, the details of which you can find in the appendix. Our group CSM of £7 billion was up 6% since the start of the year and represents a large and growing store of future value for our shareholders. Turning now to capital generation. In the first half, we generated £392 million of operating capital before new business train, keeping us firmly on track to achieving our three-year target of £2.7 billion. The underlying capital generation of £304 million was £27 million lower than the prior year. Within it, asset management capital generation reduced by £7 million despite the higher owned funds as we experienced a £14 million increase in capital requirements compared to a £12 million reduction last year. and we experienced a similar dynamic in the corporate center where last year we benefited from an 18 million pound SCR reduction. In life, the in-force contribution reduced by 10 million pounds to 314 million, driven by a 15 million pound lower return on annuity surplus assets, which we flagged in March. Importantly, Life's New Business train improved by £15 million to £20 million despite higher BPA sales as we shifted our Life's New Business to a capital light model. Management actions contributed £68 million, primarily reflecting equity hedging activities, and we remain on track towards our annual guidance of £1 to £200 million. Thanks to our good operating performance, our balance sheet continued to strengthen. The Solvency II ratio closed the period at 247% with a £5 billion capital surplus. Owned funds of £8.4 billion include £4.8 billion of PVSD, the present value of future shareholder transfers from our With Profits Fund. And this is a unique feature of M&G, reflecting the scale and profitability of our With Profits business. The PVSD is a store of future value that has grown tremendously in recent years thanks to the success of proof fund and supportive markets and this growth has been a key driver of our improved financial performance and underpins the long-term cash earnings and capital generation of the group. We will realize this asset gradually over time and thus expect to continue to operate above our target Solvency II range over the medium term. You'll also see on this page that we've updated the definition of our leverage ratio to reflect the solvency to value of our debt instead of the nominal value. And on this basis, the leverage ratio stood at 29% at the end of June. We made this change to ensure consistency between the numerator and denominator of the metric and to better align our approach to industry standards. This is still a more conservative approach than peers as we use shareholder-owned funds, not regulatory-owned funds. We're pleased with the continued strength of our balance sheet as it represents a key competitive advantage for M&G in what remains a volatile and uncertain macro environment. I will finish by briefly covering costs. Our managed cost base at the 30th of June of £744 million reflects the investments that we made last year to support growth, which underpin the strong new business momentum we are now seeing. In life, we built out our BPA team focusing on pricing and commercial capabilities. and in asset management we added private markets expertise such as the acquisitions of P Capital Partners and Beaumont and scaled our distribution platform to support our international expansion. These initiatives drove a 7% increase in costs in the second half of last year. Since then, costs have stabilized, remaining flat over the last six months. Looking to the remainder of H2, we expect asset management costs to stay in line with the first six months of the year, while corporate center costs will be roughly 10 million pounds higher due to the seasonality of our head office expenses. Our approach to cost management remains the same. We will continue to create capacity by streamlining our operating model, re-engineering our processes, optimizing third-party spend, and better leveraging technology such as AI, as you heard earlier from Andrea. These savings will offset inflationary pressures and free up resources to be reinvested into growth. By investing for long-term growth and remaining disciplined on costs, we will further improve our operating leverage and achieve our target cost-income ratio by the end of next year. And with that, I'll hand back to Andrea.