Prudential's British fund arm not looking for acquisitions

* Pru (HKSE: 2378-OL.HK - news) 's operating profit up 7 pct to 4.3 bln stg

* Record (LSE: REC.L - news) profit led by Asia, UK profit slides

* Total (LSE: 524773.L - news) dividend up 12 pct to 43.5 pence (Recasts with CEO comments, adds analyst, updates shares)

By Carolyn Cohn and Simon Jessop

LONDON, March 14 (Reuters) - Prudential (SES: K6S.SI - news) said its UK fund management arm M&G (Shanghai: 603899.SS - news) does not need to make acquisitions to bolster its competitiveness, as the British insurance group reported record profits on Tuesday.

Investors have been looking out for more consolidation among fund managers following recent large deals, including Standard Life's planned 11 billion pound ($13 billion) merger with Aberdeen Asset Management (Frankfurt: 899502 - news) , announced last week.

Consolidation, which also saw UK-based Henderson Global Investors agree a $6 billion tie-up with U.S. manager Janus Capital (NYSE: JNS - news) last year, comes as fund mangers face increased regulatory scrutiny and competition from low-cost index-tracking asset managers.

Prudential CEO Mike Wells suggested M&G wasn't about to follow suit and was focusing on making its back office functions more efficient and improving technology.

"We don't see the need to acquire anything for M&G ... to increase its competitiveness," Wells told a media call.

Prudential, which has large operations in Britain, the United States and Asia, has been concentrating on expanding its Asian business.

It reported a record 2016 operating profit of 4.3 billion pounds ($5 billion), as growth in its Asia and U.S. operations outweighed a decline in its domestic market.

Operating profit rose 7 percent from a year earlier and was above analysts' expectations of 4.1 billion pounds, according to a company-compiled poll, and the company sharply raised its dividend.

The company increased operating profit in Asia by 15 percent to 1.6 billion pounds, while its U.S. business, Jackson, recorded a 7 percent rise to 2 billion pounds.

Barrie Cornes, analyst at Panmure Gordon, described the results as "excellent", reiterating his buy rating on the stock, and Prudential's shares were up 3 percent at 17.15 pounds by 1107 GMT. They were the top gainer on Britain's FTSE 100 index .

Still, operating profit at Prudential's UK insurance business tumbled 31 percent to 828 million pounds. The insurer took a 175 million pound charge for a review of past annuity sales practices and potential compensation after a regulatory review of the products.

M&G saw an 8 percent increase in external assets under management to 137 billion pounds, helped by improvements in asset prices. But the unit's operating profit fell 4 percent, hurt by 8 billion pounds in outflows.

Prudential, which is listed in London and Asia, said it would pay a second interim dividend of 30.57 pence per share and total dividend of 43.5 pence, up 12 percent from a year earlier and compared with a forecast 41.62 pence. ($1 = 0.8242 pounds) (Editing by David Goodman and Susan Fenton)