LONDON, March 12 (Reuters) - British insurer M&G reported flat annual profit and reiterated its 2027 financial targets on Thursday and said that client flows into its investment management arm were
Fund firm M&G warns about 'overcrowded' US private credit market
M&G's Perspective on Private Credit Markets
By Iain Withers
M&G's Exposure and Market Comparison
LONDON, March 12 (Reuters) - British insurer and money manager M&G said on Thursday it had less than 2% exposure to software companies in its private assets arm and contrasted Europe's private credit funds with an "overcrowded" U.S. market, after posting full-year results.
Growth and Concerns in Private Credit
Private credit has expanded rapidly into a $2 trillion industry, but growing concerns about transparency and credit quality have led more investors to pull out of some U.S. funds.
Concerns about software companies backed heavily by credit lenders and seen as vulnerable to artificial intelligence startups have added to the trend.
Differences Between U.S. and European Markets
"We need to distinguish the U.S. from Europe. We're talking about two very different markets," M&G CEO Andrea Rossi told Reuters. "The problems you have seen in the U.S., it's mainly been driven by software exposure disrupted by AI."
The U.S. private credit market is also more mature, competitive and overcrowded, Rossi said, adding that Europe's market was still developing and remains dominated by bank lending.
M&G's Europe-focused 27 billion pounds ($36 billion) of credit assets had strong underwriting, he added.
Challenges in Other Private Assets
Some of the company's other private assets have nonetheless faced issues, including a potential hit on funds exposed to residential ground rents that face a proposed UK government cap.
Financial Results and Client Inflows
Client Inflows Pick Up
CLIENT INFLOWS PICK UP
M&G reported flat operating profit of 838 million pounds for 2025 and reiterated its 2027 financial targets.
The company said it was starting to benefit from a tie-up with Japanese insurer Dai-ichi Life struck last year, helping drive up net inflows from open business to 7.8 billion pounds, compared with 1.9 billion pounds of outflows previously.
Analyst Reactions and Market Performance
RBC analysts said the flows showed strong momentum, with earnings partly offset by lower performance fees and higher costs in asset management.
Shares were last down 2.9%, versus a 0.5% fall in the FTSE 100 index.
Sector Developments
Deutsche Bank separately said on Thursday its private credit portfolio had grown to 26 billion euros ($30 billion) and highlighted risks to the sector.
($1 = 0.7468 pounds)
($1 = 0.8668 euros)
(Reporting by Iain Withers. Editing by Tomasz Janowski and Mark Potter)
