15th Mar 2023 14:29
(Alliance News) - A strong start to 2023 for Prudential PLC was overshadowed by its mixed yearly results for 2022 and wider market turmoil hitting the stock.
Shares in the insurer slumped 11% to 1,049.00 pence each in London on Wednesday. The stock had struggled from the open, but a deeper decline came after worries at Credit Suisse Group AG sent financial stocks into turmoil.
It said annual premium equivalents - a measure of the new policies sold - rose 4.7% to USD4.39 billion from USD4.19 billion in 2021. The number came shy of company-compiled consensus of USD4.42 billion, however.
European embedded value operating profit, meanwhile, increased 12% to EUR3.95 billion. The figure is based on longer-term investment returns and ignores short-term fluctuations.
Pru declared a second interim dividend of 13.04 cents per share, up 9.9% from 11.86 a year earlier. It gave a total yearly payout of 18.78 cents per share, up 9.0% from 17.23 cents.
Both the dividend and EEV result beat consensus, analysts at Jefferies noted.
"With sales, operating profits, embedded value and dividends all in line or slightly ahead of consensus expectations, we expect all eyes today will be on the outlook for a post-reopening rebound in sales. In this regard, management have been pleasingly transparent," Jefferies analysts commented.
The company said APE sales for the two months ended February 2023 were up 15% at constant currency.
AJ Bell analyst Russ Mould commented: "There were positives in the Asia-focused insurer's numbers, the dividend was boosted and operating profit was up. This is significant as it marked the first full year of its strategy of focusing entirely on Asia and Africa, having sold its US arm. The company flagged a benefit from a reopening of the Chinese economy as the country moved on from its zero-Covid policy.
"Prudential's results may well have got a better hearing a week ago before the collapse of SVB but right now investors are treating financial stocks with the same suspicion as something they've found on their shoe."
Hargreaves Lansdown analyst Sophie Lund-Yates said it was a "sturdy set of results" for Prudential.
"The spotlight should really be shining on the group's potential in Hong Kong. The re-opening of the border with Mainland China opens the door to significantly higher insurance sales and premiums. Recent findings suggest the vast majority of visitors plan to buy insurance in Hong Kong, and ultimately this will help underpin the healthy prospective yield. When all is said and done, this was a strong first round for newly minted CEO Anil Wadhwani," Lund-Yates added.
Last year was Prudential's first full-year as an Asia and Africa focused business. In recent years, it has demerged UK fund manager M&G and US insurer Jackson.
While Prudential offered no signs it plans to move its primary listing away from London, such chatter may follow the company around going forward.
"Prudential also signalled it had no intentions to change its listing away from London, despite recent operational pivots to other regions. This should be seen as a mark of confidence for London, but is still something that can't be fully ruled out in the medium term," the Hargreaves Lansdown analyst said.
By Eric Cunha, Alliance News news editor
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