30th Aug 2023 10:36
(Alliance News) - Prudential PLC on Wednesday said a post-pandemic recovery in Asia boosted its half-year performance, as it unveiled a new growth strategy that one analyst suggested could have "enormous" potential spoils.
In the six months to June 30, the Asia-focused insurer swung to a pretax profit of USD1.18 billion from a loss of USD1.35 billion a year prior on an IFRS basis.
On an adjusted basis, operating profit rose by 3.5% to USD1.46 billion from USD1.41 billion the year before.
Despite Prudential noting strong business in both Hong Kong and mainland China, AJ Bell's Russ Mould said mainland China has not delivered the boost that many people had expected this year following the relaxation of Covid-19 rules.
"In theory, the long-term prospects for Prudential in the country look good as growing wealth should equate to greater demand for the financial services it offers. However, success does not come at the click of a finger and, like many big companies of its ilk, patience is required," he said.
Prudential's new business profit for the six-month period grew by 36% to USD1.49 billion from USD1.10 billion.
Insurance revenue grew by 10% to USD4.59 billion from USD4.16 billion the year before, with Hong Kong contributing the highest amount at USD1.58 billion.
Prudential booked an investment return of USD7.17 billion from a negative USD23.9 billion a year ago, while net investment result swung to USD652 million from a loss of USD2.10 billion.
Prudential declared an interim dividend of 6.26 cents per share, up 9.1% from 5.74 cents per share for the same period a year ago.
Richard Hunter, head of markets at interactive investor, said the increased dividend was a further sign of confidence from Prudential as the company looks to the longer-term potential of "two significant continents".
Chief Executive Officer Anil Wadhwani announced a new purpose and strategy for Prudential alongside its interim results on Wednesday.
The new strategy included "targeted investment in structural growth markets in Asia and Africa" with Prudential expecting to grow new business profit at a 15% to 20% compound annual growth rate between 2022 and 2027.
ii's Hunter said Prudential is "fully aware" that "such major continents" bring "significant opportunities."
"In Asia, for example, household wealth was over USD150 trillion in 2021, broadly similar to North America and well in excess of Europe, while it is expected that by 2030 Asia and Africa will house three-quarters of the global working age population," Hunter explained.
"The insurance and health protection markets within Prudential's target geographies provide a rich seam of opportunities alongside increasingly wealthy populations with evolving financial needs. The company has pointed to an expected middle class population of 1.5 billion across Asia by 2030, with an estimated health protection gap of USD1.8 trillion. The potential spoils are enormous and Prudential has a strong reputation in these regions."
Shares in Prudential were up 2.8% to 1,012.00 pence each in London on Wednesday morning.
By Heather Rydings, Alliance News senior economics reporter
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