Prudential CEO Sees More Outflows as Clients Pull $11 Billion

  • Insurer's shares drop most since August in London trading
  • U.K. with-profit PruFund assets surge 29% in nine months

Prudential Plc Chief Executive Officer Mike Wells said he expects to see more outflows at M&G after retail clients pulled 7.3 billion pounds ($11 billion) from its funds this year as sentiment toward fixed income assets waned. The shares dropped.

In the third quarter, the fund management unit reported 2.7 billion pounds of net outflows as retail withdrawals of 3.9 billion pounds were offset by institutional mandates, London-based Prudential said in a statement on Tuesday. M&G’s total third party assets fell 5 percent to 127.3 billion pounds as of Sept. 30.

“I think you will get a bit more” of outflows, Wells said on a conference call with reporters. “You are seeing some natural diversification as some of this money moves to other funds, other markets and the fear of euro zone has settled down a bit. That direction of travel is going to continue for a bit.”

Wells said increased investor appetite for risk had seen clients move away from bonds, traditionally perceived as safe-haven assets, toward equities at both M&G and its Eastspring Investments unit in Asia. The M&G’s Optimal Income Fund, run by Prudential’s highest-paid employee Richard Woolnough, has seen its assets shrink to about 18.4 billion pounds, according to Trustnet Ltd., from 22.8 billion pounds at the end of May.

Stock Falls

Shares of Britain’s biggest insurer by market value closed down 3.9 percent to 1,489.5 pence in London, after climbing for six of the last seven weeks.

Assets in the with-profit PruFund, within the company’s U.K. life and pension business, jumped 29 percent since the start of the year to 14.9 billion pounds boosted by an 84 percent increase in sales. That helped boost new business profit for the U.K. life business, by 16 percent to 231 million pounds.

Wells said a recruitment process to replace Jackie Hunt is under way after the former U.K. CEO’s surprise resignation last month. He added that the strategy to grow the U.K. business, which is now attracting more money from external clients because of government pension changes, wasn’t set by a single executive.

The company also reported a 13 percent increase in total new business profit to 1.76 billion pounds in the nine months through September led by double-digit growth in most of the Asian markets where Prudential operates. Profit fell 4 percent for Jackson Life, its U.S. unit, to 557 million pounds.

Prudential Plc has no relation to Newark, New Jersey-based Prudential Financial Inc.

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