REG - M&G PLC - Life insurance stress test

M&GAnnouncement

24/11/2025 07:10

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RNS Number : 7013I  M&G PLC  24 November 2025

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):

 

 

 M&G plc Group                       Shareholder     With-Profits      Regulatory
                                     Base    Stress  Base     Stress   Base    Stress
 Own Funds (£bn)                     8.5     6.7     8.9      8.0      11.6    10.9
 SCR (£bn)                           3.8     3.9     3.1      4.2      6.9     8.1
 Surplus (£bn)                       4.7     2.8     5.8      3.8      4.7     2.8
 S2 ratio (%)((i))                   223%    171%    284%     191%     168%    135%
 (i) S2 ratio (%) is defined as Own Funds / SCR, and has been calculated using
 unrounded figures.

 Prudential Assurance Company (PAC)  Shareholder     With-Profits      Regulatory
                                     Base    Stress  Base     Stress   Base    Stress
 Own Funds (£bn)                     6.6     4.9     8.9      8.0      9.7     9.1
 SCR (£bn)                           3.1     3.2     3.1      4.2      6.2     7.4
 Surplus (£bn)                       3.5     1.7     5.8      3.8      3.5     1.7
 S2 ratio (%)((i))                   214%    151%    284%     191%     157%    122%

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

 

 

Enquiries:

 Media                                        Investors/Analysts
 Irene Chambers    +44(0)7825 696815          Luca Gagliardi       +44(0)20 8162 7301
                   Irene.Chambers@mandg.com                        Luca.Gagliardi@mandg.com
 Will Sherlock     +44(0)7786 836562           Simran Parmar        +44(0)20 8162 0956
                   Will.Sherlock@mandg.com                          Simran.Parmar@mandg.com
 James Gallagher   +44(0)7552 374245
                  James.Gallagher@mandg.com

 

 

About M&G plc

M&G plc is a leading international savings and investments business,
managing money for around 4.5(1) million retail clients and more than 900(1)
institutional clients in 39(1) 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

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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

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