M&G Group has seen its operating profit reach £837m in 2024, beating expectations set at £769m.

The savings and investments firm, which is the parent company of The Prudential Assurance Company, saw its contractual service margin increase by 10% to £6bn in the year to 31 December 2024, while its operating capital generation fell from £996m in 2023 to £933m.

However, M&G recorded a loss after tax of £347m, having reached a profit of £309m in 2023. It put this down to "larger losses relating to short-term fluctuations in investment returns" and "mismatches arsing on application of IFRS 17".

The firm’s total dividend for the year increased by 2% year-on-year to 20.1 pence per share, which is "in line" with its new "progressive" dividend policy.

Group chief executive officer, Andrea Rossi, said: "Over the last 12 months, we have delivered strategic and operational momentum with meaningful progress across our three priorities: financial strength, simplification, and growth.

"Since starting at M&G, my priority has been to strengthen the foundations of the business. Despite a tough market environment we have done this. In 2024 we have reduced debt, simplified our operating model, grown asset management adjusted operating profit by nearly 20%, and continued to drive positive momentum in Life, completing £900m of bulk purchase annuity deals and launching a new innovative solution.

"We are now moving into a new phase for the group, where we will deliver sustainable and diversified growth across asset management and life."

Looking ahead, the group is now targeting an average operating profit before tax of 5% or more per annum between 2025 and 2027, while also aiming to reach £2.7bn in operating capital across the same period.

M&G has also upgraded its cost saving target from £200m to £230m of cumulative saving by the end of 2025.

Senior equity analyst at Hargreaves Lansdown, Matt Britzman, concluded: "After posting an impressive profit beat, investors might have expected more from the dividend, which only saw a modest 2% increase from the previous year. While the company's focus on simplification and streamlining has certainly boosted performance, some underlying challenges remain. Net flows into the asset management division, particularly in the UK, have struggled for some time and while there are signs of improvement, it’s still an area of weakness.

"One key issue is corporate clients de-risking their pension schemes, which has likely seen capital shift toward major insurers offering bulk annuity deals. M&G wants in on the game and is back in the market, but at much smaller volumes compared to some of the leading players.

"Despite these challenges, streamlining efforts, new cost targets, and a progressive dividend policy are positive developments. M&G shares have made a strong start to the year, but more work is needed on the overall proposition to get flows moving in the right direction."

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