13th Mar 2019 09:59
LONDON (Alliance News) - Prudential PLC said Wednesday its planned demerger of M&G Prudential is progressing as planned as the insurance giant's profit was ahead of consensus in 2018, driven - as always - by growth from its Asia operations.
Prudential also hiked its 2018 dividend by 5.0% to 49.35 pence per share compared to the 47.0p distributed in 2017.
In 2018, the life insurance and financial services company posted a pretax profit of GBP3.64 billion compared to GBP3.30 billion in 2017, a 10% increase year-on-year.
Prudential's operating profit for 2018 totalled GBP4.83 billion, up 2.8% from the GBP4.70 billion recorded in 2017. Analyst consensus forecast Prudential achieving GBP4.6 billion in operating profit.
The company's new business profit for 2018 increased 7.2% to GBP3.88 billion from GBP3.62 billion in 2017, again ahead of consensus which forecast GBP3.6 billion in new business profit.
Annual premium equivalent new business in 2018 was down 2.2% in 2018 at GBP6.80 billion, in line with consensus, from GBP6.96 billion in 2017.
Prudential's group solvency II capital surplus was GBP17.2 billion in 2018, compared to GBP13.3 billion in 2017, giving the company a cover ratio of 232%. A ratio of 100% means a company can meet all of its risk obligations.
"In 2018, our financial performance, again led by our Asia operations, is testament to the scale of our opportunity set, the depth of our capabilities and our unrelenting focus on executing our strategy at pace. At the same time we have made good progress in our preparations for the demerger of M&G Prudential from Prudential," said Chief Executive Mike Wells.
Prudential's Asia unit reported a 9.1% rise in operating profit to GBP2.16 billion in 2018 - ahead of consensus - with its insurance operations generating GBP1.98 billion in profit.
The unit saw continued growth of its in-force book of recurring premiums, with renewal insurance premiums up 16% to GBP12.86 billion. The unit now derives 70% of its revenue from its health and protection business, up from 68% in 2017.
Regionally,within the Asia unit, profit was driven by 33% growth in Hong Kong, 22% growth in Singapore, and 20% growth in China.
The company's US unit saw a 14% slip in operating profit to GBP1.92 billion, slightly behind consensus. The US unit experienced higher fee income, but this was offset by market-related deferred acquisition amortisation costs - which jumped to GBP194 million in 2018 compared to GBP83 million the year before.
Finally, Prudential UK & Europe - which will become M&G Prudential - saw an 18% rise in operating profit to GBP1.63 billion, ahead of consensus, with the unit's total insurance operations generating GBP1.16 billion in operating profit, significantly ahead of consensus and 32% higher than 2017.
The UK & Europe's core in-force annuity business saw a 13% decrease in operating profit to GBP519 million.
Prudential said the unit's profit rise was largely attributable to contributions - arising from updated longevity assumptions - which are not expected to recur.
In the UK & Europe, Prudential's asset management business saw a 4.6% decrease in operating profit to GBP477 million. The UK & Europe unit's assets under management increased slightly in 2018 to GBP276.6 billion.
Shares in Prudential were up 0.2% Tuesday morning at 1,532.26 pence each.
Related Shares:
Prudential