14th May 2020 10:38
(Alliance News) - Prudential PLC on Thursday said first quarter sales in Asia were weighed down by the effects of Covid-19 on mainland China and Hong Kong.
Shares in Prudential were down 5.3% at 1,033.76 pence in London in morning trading.
Asia APE sales excluding Hong Kong and China were up 1% for the three months ended March 31 compared to a year before, while total Asia APE sales fell 24% to USD986 million.
APE sales are "a measure of new business activity that comprises the aggregate of annualised regular premiums and one-tenth of single premiums on new business written during the year for all insurance products, including premiums for contracts designated as investment contracts under IFRS 4," Prudential explained.
US APE sales rose 25% year-on-year for the quarter to USD631 million, and were up 19% versus the fourth quarter of 2019.
However, Chief Executive Mike Wells said: "While institutional APE sales were higher than in the fourth quarter of 2019, retail sales were lower following the repricing of fixed and fixed-index annuities over late 2019 and the first quarter of 2020 in line with the evolving interest rate environment."
Wells added: "Pricing actions across our product range, together with Covid-19-related restrictions on advisers' ability to interact with potential customers, are likely to reduce sales levels materially in the short term."
Prudential is planning a minority initial public offering for its Jackson National Life Insurance Co unit in the US, preparations for which are continuing "alongside active evaluation of other options".
Wells said: "Despite the global effects of the Covid-19 outbreak, the group remains focused on its strategic priorities, including to enable our investors to benefit to the fullest extent from the opportunity presented by our business in Asia. We continue to prepare for a Jackson minority IPO alongside active evaluation of other options with respect to creating an independent Jackson. We will provide an update on our progress at the group's half year 2020 results in August."
Prudential's estimated local capital summation method cover ratio as at March 31 stood at 302%, having been 309% at the end of 2019, after allowance for a second interim dividend set to be paid in May. Estimated shareholder surplus rose by USD1.6 billion over the quarter.
The company is still forecasting that its 2020 operating results will "reflect costs associated with the previously announced restructuring of the central functions and IFRS 17 expenditure".
Prudential appointed Shriti Vadera as non-executive director, as announced earlier in the year. Vadera is set to become company chair in January 2021.
The CEO commented: "Prudential continues to invest and innovate to meet important needs for our consumers and has a highly resilient business model. While we cannot say with certainty how the Covid-19 outbreak will impact the global economy and hence how Prudential may be impacted, we believe we are well positioned over the long term both to weather the disruption caused by the pandemic, and to support our customers and communities in the recovery to come."
By Anna Farley; [email protected]
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