Prudential profits rise on strong US, Asia results
Shares in Britain’s biggest insurer rose as much as 3%, making it the top gainer on the FTSE 100 Index, after the company boosted its interim dividend by 15% to 11.18p per share.
Prudential’s operating profit rose 17% to £1.52bn (€1.91bn) on a constant-currency basis, boosted by fee income from its US business and higher sales of health and protection products in Asia.
Operating profit rose by just 7% on an actual exchange rate basis, however. Prudential blamed the depreciation of key Asian currencies against the pound.
“The Asian performance came despite political uncertainties in Indonesia and Thailand, with Hong Kong up an eye-catching 32%,” UBS analyst James Shuck wrote in a note.
“Importantly, there are no changes to the outlook for Asia,” he said, maintaining his “buy” rating on the stock.
A growing, wealthy middle class in Asia has been a focus for the British life insurance and pensions heavyweight, particularly in countries whose citizens and businesses are largely uninsured such as Indonesia, Malaysia, Philippines, Vietnam and Thailand.
Chief executive Tidjane Thiam said the business fundamentals in Asia remained “compelling”. New business profit grew 15% at its Asia life business.
Meanwhile, Prudential weathered changes to British pensions announced in March.
The reforms scrapped a requirement for retirees to swap their pension pots for an annuity, which provides an income for life.
The company’s UK life business posted a 10% rise in operating profit to £374m as it made up for a hit to individual annuities by selling £104m worth of ‘bulk annuities’ in the six months ended June.
Rival pensions groups such as Legal & General and Aviva have been mitigating the impact of the reforms by striking such bulk deals with firms looking to outsource all or part of their pension scheme liabilities.
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