Pru profits up by 39%

British insurer group Prudential improved annual profits by 39% today as it set out its expectations for a further strong rise in sales growth in the UK this year.

The group, which achieved an overall surplus of £1.12bn (€1.63bn) for 2004, said it was well placed to take advantage of a continued upturn in the UK market.

It recently raised £1bn (€1.45bn) from a rights issue and will invest the proceeds to make the most of developments in its home market place.

The Pru said it expected UK sales to grow by 10% this year – against industry expectations of around 5% in 2005. An internal rate of return on sales of 14% has also been forecast by 2007, compared with the 12% achieved in 2004.

With the market emerging from a three-year slump, the Pru saw UK sales improve by 40% to £817m (€1.18bn) in the year to December 31. Profits from the division were 25% higher at £450m (€655m), the company added.

The Pru said its performance reflected the “continued impact of its brand, track record of investment performance and financial strength”. It has also moved from a direct sales operation to one with several distribution channels.

Chief executive Jonathan Bloomer said: “The UK market is starting to recover after three years of decline and, as a rise of 40% in new business achieved profits shows, it is clear that the changes we have made to the business are enabling is to take advantage of this upturn.”

Mr Bloomer said the company also achieved strong growth in Asia, where profits lifted 19% and the Pru identified “excellent growth prospects” throughout the region, particularly in China and India.

In the United States, where the Pru operates Jackson National Life, sales for the year were up 21% on 2003 at £453m (€659m). The company said its performance continued to outperform the market in the region.

Across the group, profits from new business were up 23% at £688m (€1bn). Shareholders will receive a full-year dividend of 15.84p a share, an increase of 3% on a year earlier.