Prudential, the multinational life insurance and financial services giant, is to merge its UK asset management arm M&G with its UK and European insurance and savings divisions to create a £332 billion (€368 billion) subsidiary.
The FTSE-100 firm said the merger of M&G with Prudential UK & Europe would create “a leading savings and investments business ideally positioned to target growing customer demand for comprehensive financial solutions”.
London-headquartered Prudential expects the reorganisation to generate annual cost savings of £145 million by 2022 for a one-off cost of £250 million, to be paid by shareholders.
Group chief executive Mike Wells said that the merger “will allow us to better leverage our considerable scale and capabilities”.
John Foley, the current chief executive of Prudential UK & Europe, will become chief executive of the newly-combined entity, to be known as M&G Prudential.
M&G chief executive Anne Richards, who was brought in from Aberdeen Asset Management last year to lead a turnaround, will remain in charge of the asset management part of the new entity.
Richards will also become co-deputy chief executive of M&G Prudential alongside Clare Bousfield, currently chief executive of insurance for Prudential UK & Europe.
The merger is part of a wave of consolidation in the asset management industry, as active asset managers seek to fend off competition from passively-managed lower-cost index funds.
Next week Standard Life and Aberdeen Asset Management will merge to create a £670 billion active manager that will be Europe’s second largest asset management company.
The Prudential merger was announced on the same day that the group released its first half results which showed operating profits rising 5% to £2.36 billion, boosted by growth in Asia.
Operating profits at M&G increased 10% to £248 million while its assets under management rose 6% to £281 billion including external net inflows of £7.2 billion.
This compares with £7 billion of net outflows in the first half of 2016 and £8 billion in outflows for the whole of last year.
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