Prudential takes £3.9bn hit on M&G business

The firm said retail investors pulled the funds out of its M&G business during the third quarter after China’s economic slowdown fears sent markets reeling.

It also cautioned that it expects “high levels of volatility and macroeconomic uncertainties” to continue into the fourth quarter.

Shares fell 3 per cent as the outflows overshadowed figures showing new business profit across the group lifted 13 per cent to £1.8bn in the first nine months of the year, driven by a 24 per cent jump in Asian new business profit to £976m.

In the UK, new business profit rose 16 per cent to £231m in the first nine months, lifted by demand for flexible retirement products.

The insurer said: “These results reflect our successful response to the new emerging consumer landscape.”

However, the firm said retail investors pulled the funds out of its M&G business during the third quarter, after China’s economic slowdown fears sent markets reeling.

It also cautioned it expects “high levels of volatility and macroeconomic uncertainties” to continue into the fourth quarter.

The insurer said: “These results reflect our successful response to the new emerging consumer landscape following significant industry reform.”

However, at its M&G asset management arm, total retail funds under management reduced to £63.5bn at the end of September, down from £73bn a year ago, due to “weak investor sentiment”.

In the third quarter, the near £4bn in fund withdrawals from retail investors far outweighed £1.2bn of inflows from institutional investors.

Financial markets were rocked over the summer by fears of a slowdown in China’s economy and an impending interest rate hike in the United States.

Prudential chief executive Mike Wells said the group had made “good progress in the third quarter”.