Life insurance stress test highlights

M&G plc's financial resilience

M&G plc notes the publication today of the Prudential Regulation Authority ("PRA") results of its sector-wide 2025 Life Insurance Stress Test ("LIST"). M&G plc participated through its in-scope entity, the Prudential Assurance Company Ltd ("PAC").

Under the LIST, the PRA assessed large life insurers' resilience to a three-stage, evolving market stress using year-end 2024 balance sheets as a starting point (details of which are set out below).

Under this three-stage stress scenario, the M&G plc Group Shareholder ratio, our primary measure of financial strength, would decrease from 223% to 171% (as of 31 December 2024), remaining well within our long-term target range of 160-190%, and highlighting our financial resilience even under severe financial stress.

The PRA's assessment focused on PAC, with PAC continuing to be sufficiently capitalised on a Shareholder and Regulatory basis. In the PRA's three-stage stress scenario, the PAC Shareholder ratio would decrease from 214% to 151% (as of 31 December 2024), with the Regulatory ratio, which excludes the surplus within the With-Profits fund (£3.8bn as of 31 December 2024, at the end of the stress scenario), decreasing from 157% to 122% (as of 31 December 2024).

Further details of the PRA's approach to the stress test and the detailed results in relation to all participating institutions are available from the PRA website.

Notes to editors:

The LIST exercise is one of the PRA's key priorities for 2025, with the objectives being to assess sector and firm resilience to adverse scenarios, strengthen market understanding, and improve insight into potential risk management vulnerabilities.

The PRA prescribed core scenario assesses a Life insurer's resilience to a three stage, evolving market stress using year-end 2024 balance sheets as a starting point.

·      Stage 1: assumes an instantaneous market shock, including interest rates lower by 150bps, a 30% fall in equity markets, and a significant widening of credit spreads. No trading of assets is permitted.

·      Stage 2: real estate values are significantly lower (28% for residential and 30% for commercial), and there is further deterioration in credit markets including downgrades and defaults. Trading of assets remains prohibited, other than in derivatives to restore matching.

·      Stage 3: credit spreads start to narrow. No further deterioration in market conditions is assumed. Some trading of assets to rebalance portfolios is allowed. No capital raising is permitted at any stage of the test.

M&G plc Group and PAC key metrics are set out below using year-end 2024 balance sheets as a starting point (tables show Base level and after Stage 3 Stress):

·      (i) S2 ratio (%) is defined as Own Funds / SCR, and has been calculated using unrounded figures.

Enquiries:

About M&G plc

M&G plc is a leading international savings and investments business, managing money for around 4.5¹ million retail clients and more than 900¹ institutional clients in 39¹ offices worldwide. As at 30 September 2025, we had £364.9 billion of assets under management and administration. With a heritage dating back more than 170 years, M&G plc has a long history of innovation in savings and investments, combining asset management and insurance expertise to offer a wide range of solutions. We serve our retail and savings clients under the M&G and Prudential brands in the UK and Europe, and under the M&G Investments brand for asset management clients globally.

Additional Information

M&G plc, a company incorporated in the United Kingdom, is the ultimate parent company of The Prudential Assurance Company Limited (PAC). PAC is not affiliated in any manner with Prudential Financial, Inc., a company whose principal place of business is in the United States of America or Prudential plc, an international group incorporated in the United Kingdom.

Forward-Looking Statements

This announcement may contain certain 'forward-looking statements' with respect to M&G plc (M&G) and its affiliates (the Group), its plans, its current goals and expectations relating to future financial condition, performance, results, operating environment, strategy and objectives. Statements that are not historical facts, including statements about M&G's beliefs and expectations and including, without limitation, statements containing the words 'may', 'will', 'could', 'should', 'continue', 'aims', 'estimates', 'projects', 'believes', 'intends', 'expects', 'plans', 'seeks', 'outlook' and 'anticipates', and words of similar meaning, are forward-looking statements. These statements are based on plans, estimates and projections which are current as at the time they are made, and therefore persons reading this announcement are cautioned against placing undue reliance on forward-looking statements. By their nature, forward-looking statements involve inherent assumptions, risk and uncertainty, as they generally relate to future events and circumstances that may not be entirely within M&G's control. A number of factors could cause M&G's actual future financial condition or performance or other indicated results to differ materially from those indicated in any forward-looking statement. Such factors include, but are not limited to: changes in domestic and global political, economic and business conditions; market-related conditions and risk, including fluctuations in interest rates and exchange rates, the potential for a sustained low-interest rate environment, corporate liquidity risk and the future trading value of the shares of M&G; investment portfolio-related risks, such as the performance of financial markets generally; legal, regulatory and policy developments, such as, for example, new government initiatives and regulatory measures, including those addressing climate change and broader sustainability-related issues, and broader development of reporting standards; the impact of competition, economic uncertainty, inflation and deflation; the effect on M&G's business and results from, in particular, mortality and morbidity trends, longevity assumptions, lapse rates and policy renewal rates; the timing, impact and other uncertainties of future acquisitions or combinations within relevant industries; the impact of internal projects and other strategic actions, such as transformation programmes, failing to meet their objectives; changes in environmental, social and geopolitical risks and incidents, pandemics and similar events beyond the Group's control; the Group's ability along with governments and other stakeholders to measure, manage and mitigate the impacts of climate change and broader sustainability-related issues effectively; the impact of operational risks, including risk associated with third-party arrangements, reliance on third-party distribution channels and disruption to the availability, confidentiality or integrity of M&G's IT systems (or those of its suppliers); the impact of changes in capital, solvency standards, accounting standards or relevant regulatory frameworks, and tax and other legislation and regulations in the jurisdictions in which the Group operates; and the impact of legal and regulatory actions, investigations and disputes. These and other important factors may, for example, result in changes to assumptions used for determining results of operations or re-estimations of reserves for future policy benefits. Any forward-looking statements contained in this document speak only as of the date on which they are made. M&G expressly disclaims any obligation to update any of the forward-looking statements contained in this document or any other forward-looking statements it may make, whether as a result of future events, new information or otherwise except as required pursuant to the UK Prospectus Rules, the UK Listing Rules, the UK Disclosure and Transparency Rules, or other applicable laws and regulations. This document has been prepared for, and only for, the members of M&G, as a body, and no other persons. M&G, its Directors, employees, agents or advisers do not accept or assume responsibility to any other person to whom this document is shown or into whose hands it may come, and any such responsibility or liability is expressly disclaimed.

1. As at 31 December 2024