M&G Prudential saw external net inflows shrink to £3.5bn in the first six months of 2018, compared to £7.2bn for the same period last year, while the group said its demerger from parent firm Prudential is "progressing well".
The group reported assets under management for the overall M&G Prudential business fell to £341.9bn, £9bn lower than at the end of 2017, mainly as a result of the £12bn of annuity liabilities reinsured to Rothesay Life, announced in March.
Meanwhile, IFRS operating profit from M&G Prudential asset management increased by 10% to £272m, reflecting a stable cost-income ratio of 54%.
M&G Prudential said external net inflows were "robust" despite the first half of 2018 seeing net sales of £3.5bn, compared to £7.2bn last year, with the Optimal Income fund and multi-asset range popular with European investors, while institutional clients opted for illiquid credit and equity infrastructure strategies.
Meanwhile, the group said although overall AUM moved lower to £341.9bn, external AUM "continued to benefit from net inflows". While the latter was offset by negative market movements, it was reported at £165.5bn, 1% higher than at the start of the year.
In addition, the PruFund saw net inflows of £4.4bn, marginally higher than the £4.3bn reported last year, leading to an increase in PruFund AUM of 12% to £40.3bn.
In the results, parent firm Prudential said it was "focused on progressing the actions needed for the demerger of M&G Prudential from the group," and it is "engaging positively with external stakeholders".
The results said: "As we outlined in March, we believe we will be better able to focus on meeting our customers' rapidly evolving needs and to deliver long-term value to investors as two separate businesses.
"Following separation, M&G Prudential will have control over its business strategy and capital allocation, which will enable it to play a greater role in developing the savings and retirement markets in the UK and Europe through two of the financial sector's most trusted brands, M&G and Prudential UK & Europe.
"Prudential, focused on our market-leading businesses in Asia and the US, will be strongly positioned to develop consistent, attractive returns and realise the growth potential across our international footprint."
Both Prudential plc and M&G Prudential are expected to meet the criteria for inclusion in the FTSE 100 index.
The results also noted the recently announced staff changes including the departure of M&G Investments CEO Anne Richards, who is to join Fidelity International later this year.
Mike Wells, group chief executive, said: "I would like to thank Anne Richards for her contribution to the group's success as chief executive of M&G Investments. As announced on 27 July 2018, Anne is resigning from the group, effective on 10 August 2018, to take up a new senior position in the financial services industry, and we wish her all the best."
John Foley, chief executive of M&G Prudential, will take on the additional responsibilities of becoming chief executive of the key regulated entities of M&G and Prudential UK & Europe.
Commenting on the results, Wells added: "We have made a good start to 2018, delivering high-quality, profitable growth. At the same time, we are taking the steps needed for the demerger of M&G Prudential from the group, which we announced in March, alongside implementing M&G Prudential's merger and transformation programme, which remains on track to meet its objectives.
"In the UK and Europe, the number of people of retirement age is forecast to grow by 55 million over the next four decades. The region's wealth is increasingly concentrated in the hands of the older generations: in the UK the over-55s control two-thirds of the nation's total wealth. Many of these savers want products that offer better returns than cash, while smoothing out the ups and downs of markets.
"M&G Prudential is ideally placed to meet this growing demand for investment solutions with its market-leading with-profits fund and comprehensive range of actively managed funds. Once demerged from the group, supported by the benefits of its merger and transformation programme, M&G Prudential is expected to be in an even better position to serve these customers as an independent, capital-efficient business."