M&G after single market: Life insurance arm to take lead in new strategy pursuing European business

M&G GROUP, the investment manager, is seeking ways to sell its products in Europe to take advantage of the single market.

David Morgan, the investment director who will succeed Paddy Linaker as managing director next July, said: 'We intend to develop steadily over time our capabilities in overseas retail markets and overseas institutional markets.'

M&G's life insurance arm, headed by Alan Oddie, is likely to be at the forefront of this strategy. The EU's third insurance directive will create a single market in life insurance next July.

Mr Morgan indicated that M&G is in discussion with banks and other potential partners over providing a distribution network.

M&G Life contributed pounds 12.7m to the group's latest profits, up from pounds 10.2m. Life single premiums climbed by 35 per cent to pounds 131m, but annual premiums slipped back.

M&G Life wrote pension single premiums of pounds 54m. Mr Oddie said the company had accepted about 2,500 transfers into its personal pensions.

M&G's pre-tax profits for the year to September rose by 29 per cent to pounds 50.9m, helped by a rising stock market. Funds under management rose even more strongly - by 45 per cent to nearly pounds 12.5bn. The results received a pounds 5.4m boost from the money 'saved' from the launch of two large investment trusts in the previous year.

M&G is paying a final dividend of 15p to increase the total by a quarter to 25p a share. Earnings per share climbed by 31 per cent to 47.8p.

The group has failed to turn its impressive fund management performance into sales. More than 80 per cent of its unit trust and life insurance funds have been among the top quartile of performers in their sectors over one and two years. But net sales of unit trusts were only pounds 92m - a disappointing performance in a record year for the unit trust industry.

Peter Emms, head of the new marketing team, pointed to the high level of sales to institutions within the unit trust industry's total and the large demand this year for high-income funds.

Concern that funds paying an income of 10 per cent may put investors' capital at risk has prompted M&G to stay out of this market.

Mr Emms said: 'We have chosen not to launch a high-income product primarily because we don't think consumers fully understand the product.'

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