Profits down at Prudential

Prudential reported a sharp fall in 2003 profits today after feeling the pressure from a gruelling year in the insurance industry.

Profits for the year of £794m (€1.18bn) were at the bottom end of market expectations and much lower than the £1.13bn (€1.68bn) reported a year earlier.

The decline by the UK’s second biggest insurer came after a previously announced 12% drop in sales as stock market volatility deterred investors.

As expected, the Pru cut its full-year dividend to 16p a share and said it was also lowering annual bonuses paid to with-profits pension holders. Those with with-profits endowments policies will see their rate unchanged.

Despite the tough year, Prudential chief executive Jonathan Bloomer believed there was cause for optimism.

He added: “There were some increasingly positive trends in the third and fourth quarters as markets began to stabilise and sales started to recover, and we ended the year in good shape.

“We have one of the strongest UK life funds in the industry, our capital position is strong and we are well placed to manage the business for growth.”