With many firms cancelling or delaying the payment of dividends, income investors welcomed today's confirmation from M&G (MNG) of the payment of both its ordinary and special dividends totaling 15.77 pence per share. The stock was marked up 8% to 138p.
Chief executive John Foley said, 'our financial strength means we can also do the right thing by our shareholders, and make good on our announced intention to pay dividends totaling £410m. Many of our shareholders are income funds or individual savers who rely on these payments for part of their retirement income.’
Total assets under management and administration (AUMA) fell 8% to £323bn in the first-quarter to 31 March 2020, giving back all the gains made last year. This was mainly due to market weakness during March with only 1% of the 8% representing net client outflows.
Importantly the ProFund and Institutional Asset Management businesses saw net client inflows of £2.8bn which offset half of the £5.6bn outflows in Retail Asset Management. Net client outflows have reduced significantly since March.
The firm reported an adjusted operating profit of £134m in the first-quarter resulting in an unaudited solvency ratio of 168% compared with 176% at 31 December 2019. The movement reflected capital generation of £311m reduced by the £410m of dividend payments.
The solvency ratio is a financial measure of a company’s ability to meet its short- and long-term debt obligations. Sensitivity analysis shows the coverage ratio remaining above 160% in the event of a sudden 20% fall in equity markets or a 20% downgrade to the credit quality of assets.
Management reiterated its goal to generate £2.2bn of additional total capital for the three-years to 2022, despite the negative markets experienced in the first quarter.
The company also announced this morning that it had purchased the wealth management platform Ascentric from Royal London, which brings in £14bn of assets under administration as well as access to over 90,000 individual customers.
The deal allows M&G to offer third-party discretionary fund management services and individual savings account (ISA), self-invested personal pensions (SIPP) and general account wrappers on a single platform.