The largest insurer in the UK is planning to implement cost-cutting measures in one of its divisions that suffered a profit decline in the first half of 2016.
Prudential’s M&G Investments will focus on slashing expenses in the second half following a net outflow of £7 billion in the six months through June, according to Anne Richards, the new CEO of the business.
The outflows pulled M&G’s operating profit down 10% to £225 million in the first half,
Bloomberg reported. Cost-to-income ratio is also seen to “trend towards 60%” for the entire year.
“The whole backdrop for asset management is changing quite rapidly but it’s important that we keep investing,”
Bloomberg quoted Richards as saying. “We are trying to keep that balance right between investing for the future and managing our costs.”
It was not mentioned in the report if M&G’s cost-cutting plan would entail job cuts.
The firm already reduced expenses by 8% in the first half and it looks to tighten its belt further as it navigates through the UK’s departure from the European Union.
“The challenge for the whole industry is that we don’t know exactly what shape or form [Brexit will take]”,
Bloomberg quoted Richards as saying. “We have to give ourselves options so we are in a position to react and adapt.”
Unlike its subsidiary, Prudential performed well in the first half with a 6% rise in its profits.
Prudential’s operating profits stood at £2.06 billion – well ahead of the £1.88bn estimate from analysts. Its life insurance unit in the UK also recorded an 8% increase in operating profits to reach £473m.
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