10 June 2024
M&G plc
Announces
Deleveraging Actions of up to £450m
As part of the commitment to reduce
its Solvency II leverage ratio to 30% or less by 2025, M&G is
today announcing a series of deleveraging actions totalling up to
£450m.
This includes the intention to redeem
the £300m 3.875% resettable dated Tier 2 notes on 20 July 2024,
which has received approval by the PRA. M&G intends to
call this bond in full and not to refinance it.
M&G is also launching Tender
Offers for four of its outstanding Tier 2 notes for an aggregate
consideration of up to £150m. The Notes targeted by the
Tender Offers are:
·
The £750,000,000 5.625 per cent. Resettable Dated
Tier 2 Notes due 2051;
·
The £600,000,000 5.560 per cent. Resettable Dated
Tier 2 Notes due 2055;
·
The £700,000,000 6.340 per cent. Resettable Dated
Tier 2 Notes due 2063, and
·
The £500,000,000 6.250 per cent. Resettable Dated
Tier 2 Notes due 2068.
At the end of March 2024, the Group
Solvency II coverage ratio remained strong at 203% even after
factoring in the £311 million 2023 final dividend announced at the
2023 FY Results.
We would expect the £216m restriction
to Tier 2 and Tier 3 capital reported at the 2023 FY Results to
become immaterial following the conclusion of these deleveraging
actions, which would meaningfully improve the efficiency of
M&G's balance sheet.
By addressing this capital
restriction, we expect the Solvency II coverage ratio to be only
moderately impacted. Based on a deleveraging of up to £450m,
we estimate that the Q1 2024 pro-forma Group Solvency II coverage
ratio would remain comfortably above the top end of the target
operating range of 160%-190%.
Andrea Rossi, M&G Chief Executive Officer
said:
"Today's announcement demonstrates
the strength of our commitment to investors, and our continued
focus on delivering on our three strategic priorities:
Financial Strength, Simplification, and Growth.
"Deleveraging and improving the
efficiency of our balance sheet are key priorities for us, and
these actions represent an important step towards the achievement
of our target leverage ratio of 30% or less by 2025.
"I remain confident that
M&G is well placed to continue delivering strong operational
and financial outcomes to both our customers and
shareholders."