Prudential beats expectations for new sales

Insurance giant Prudential posted sales figures well ahead of expectations today after achieving strong growth in all its key markets.

The group said sales of new insurance products reached a record £1.85bn (€2.7bn) in 2004, a jump of 19% on a year earlier and higher than the £1.7bn (€2.4bn) forecast by most London market analysts.

The Pru said it expected the growth to continue into this year and added that it was well placed in the UK market, where it has pledged to drive expansion following a £1bn (€1.4bn) rights issue last year.

The fundraising exercise was seen by many in London as a shift in strategy and led some institutional shareholders to question the position of chief executive Jonathan Bloomer.

Today’s figures show sales in the UK and Europe rose 40% on 2003 to £817m (€1.2bn), with the figure up 21% when stripping out a one-off business transaction with Royal London.

Mr Bloomer said: “All our businesses are showing strong momentum, and we have delivered significant year-on-year sales growth in each of our markets.”

In the US, Jackson National Life sales for the year of £453m (€651m) were up 21% on constant exchange rates, while the Pru said its Asian operations benefited from a strong fourth quarter to rise 14% to £576m (€827.8m).

All figures are on an annual premium equivalent basis – the standard industry measure that strips out volatility by including new regular premiums plus 10% of single premiums.

In the fourth quarter, Prudential said sales of £294m (€422.5m) in the UK and Europe were up 104% on the same period a year earlier. It pointed out that the increase had been achieved without any material change in commission rates.

Among factors driving the improvement, Prudential said sales through partnerships had been strong, including agreements with Lloyds TSB and Alliance & Leicester to sell credit life protection products.

Today’s figures represent a sharp recovery from 2003, when stock market volatility caused annual profits to fall to £794m (€1.1m) from £1.13bn (€1.6bn). The annual dividend was also cut.