M&G Shares Dip Despite Strong Inflows and Positive Outlook

Shares of M&G (LON: MNG) are down approximately 1.2% in on Thursday morning following the release of its full-year 2025 results.

While the report showcased strong momentum with significant net inflows, the market appears to be reacting to other factors within the announcement, such as reduced operating capital generation, or perhaps profit-taking after a period of gains.

M&G reported net inflows from open business of £7.8 billion, a substantial turnaround from the £(1.9) billion outflow in 2024. Adjusted operating profit before tax remained relatively flat at £838 million, compared to £837 million the previous year.

Operating capital generation (OCG) decreased to £765 million from £933 million in 2024. The shareholder Solvency II ratio improved significantly to 242% from 223%. The total dividend per share increased modestly to 20.5 pence from 20.1 pence in 2024.

The increase in dividend per share, though small, signals a commitment to returning value to shareholders. Markets will be looking closely at the solvency ratio, which indicates the company’s financial strength and ability to withstand market shocks.

The company’s asset management arm was a key driver of growth, generating £7.0 billion in net inflows from external clients. The life insurance business also saw a return to growth, driven by increased bulk purchase annuity (BPA) volumes and a resurgence in PruFund inflows.

The company emphasized that the strategic partnership with Dai-ichi Life HD is already yielding positive results, with £0.4 billion in inflows generated in the first seven months. M&G anticipate that this partnership will deliver at least $6 billion of new business over five years.

Despite the positive inflow figures, the dip in operating capital generation (OCG) could be contributing to investor caution. The decrease in OCG was primarily attributed to higher capital strain from Life new business. However, it’s worth noting that OCG before new business strain is in line with the company’s 2025-2027 cumulative target of £2.7 billion.

Key Drivers:

• Asset Management Strength: Strong demand for public equities and private market strategies.
• Strategic Partnerships: Early success in collaboration with Dai-ichi Life HD.
• Cost Savings: Transformation program delivered £250 million in cost savings.

Andrea Rossi, Group Chief Executive Officer, said: “2025 was a year of strong commercial momentum and strategic progress for M&G…With a clear strategy and the right resources in place, I am confident in M&G’s ability to deliver meaningful profit acceleration and sustainable long-term value for customers, clients and shareholders.”

M&G is projecting an average annual growth in adjusted operating profit before tax of at least 5% over 2025-2027, with a meaningful acceleration expected in 2026. The company is also targeting a cost-to-income ratio of 70% by the end of 2027. The financial targets, if achieved, should give conviction to the markets.