British insurer Prudential is merging its asset management
business with its U.K. insurance operations in a cost-savings
Combining asset manager M&G with Prudential U.K &
Europe, a provider of long-term savings, investment and
retirement income services, will help cut £145 million
(about $189 million) in annual costs by 2022, according to a statement from Prudential Thursday. The
combined units have more than six million customers globally
and a total £332 billion of assets.
M&G Prudential will immediately begin a large-scale
digital investment program to increase its competitiveness with
technology and systems upgrades, Mike Wells, Prudentials
chief executive officer said during a media call about the
merger. The scale and expertise in a newly combined business
will allow the organization to develop more
customized products for clients on both the retail
and institutional side, according to Wells, who said the firm
is not currently planning to cut staff in client-facing
We are a little over 9,300 employees in the combined
business. It is a good crew, he said. There will be
no change in the fund managers or the research team.
When asked whether there was a difference in culture between
the businesses, he acknowledged subtle differences but said
that conversations with fund managers highlighted an
appreciation for the security that comes from being part of a
business with sizable resources.
Analysts view the merger favorably. Shore Capital director
Eamonn Flanagan, for example, said combining the U.K. insurance
and M&G business makes enormous sense as it
helps the firm cut costs while offering a unified
proposition to the market.
Pru has now 3 fully formed, unified, distinct and
financially robust divisions across Asia, the U.S. and the
U.K., Flanagan said.
Anne Richards, now CEO of M&G, will become deputy chief
executive of M&G Prudential following the merger. In the
firms statement, Richards said the deal will enable
our investment teams to offer their expertise to a wider range
of customers and across a broader range of investment and
savings formats, while continuing to provide our current
clients with the same high level of service.
[II Deep Dive: The Slippery Business of Manager
A spokeswoman for M&G said Richards was not taking
calls. Further details on the newly integrated company are to
be presented at Prudentials investor conference in London
on November 16, according to the statement.
Since the end of last year, media reports have suggested
that the company was looking to sell its £45 billion
pensions annuity book. The London Times reported in December that former Aegon
chief financial officer Clare Bousfield had been appointed to
assess market appetite for such a sale.
On the media call, Wells said that the profitable annuity
book would not be part of any such conversation,
but declined to say whether Prudential might consider selling a
portion of it.
We are not looking to get rid of the entire book that
we have. It is a case of price discovery for us, he said.
The with-profits is not part of that consideration at
this point in time. I think it is in the interest of our
shareholders to keep things a little tight.