8th Aug 2018 10:52
LONDON (Alliance News) - Prudential PLC on Wednesday reported a drop in its interim profit on the back of lower premiums.
The FTSE 100-listed life insurance and financial services company posted a 22% drop in IFRS pretax profit in the six months ended June 30 to GBP1.73 billion from GBP2.2 billion. Gross premiums earned decreased 3.5% to GBP21.34 billion from GBP22.11 billion.
Earned premiums, net of reinsurance, more than halved to GBP8.38 billion from GBP21.16 billion. First half total revenue, net of reinsurance, declined to GBP10.92 billion from GBP42.92 billion.
The insurer said its financial performance was driven by its Asia division, which saw 11% growth in new business profit to GBP1.12 billion.
Prudential's IFRS interim operating profit increased 9% to GBP2.41 billion from GBP2.36 billion the year before. Underlying free surplus cash generation was up 14% to GBP590 million.
Prudential lifted its interim dividend by 8% to 15.67 pence per share from 14.50p the previous year.
The company's Solvecny II surplus was estimated at GBP14.4 billion, equivalent to a ratio of 209% - up from GBP13.3 billion and 202% at December.
Prudential said its planned demerger of M&G Prudential is "progressing well".
In March, Prudential announced that M&G Prudential will be demerging from Prudential, resulting in two separately listed companies.
Looking ahead, Prudential said it is confident of growing profit. The company believes its strong underlying opportunities, ongoing focus on risk management and strong balance sheet provides value for shareholders.
In a separate announcement, Prudential said Fields Wicker-Miurin has been appointed non-executive director and a member of the remuneration committee. She will join the board September 3.
Wicker-Miurin was chief financial officer and director of strategy of the London Stock Exchange from 1994 to 1997 and has held non-executive directorships at Royal London Group and Savills PLC. She has also served as a member of NASDAQ's Technology Advisory Council.
Chief Executive Mike Wells said: "We have made a good start to 2018, delivering high-quality, profitable growth. At the same time, we are taking the steps needed for the demerger of M&G Prudential from the group, which we announced in March, alongside implementing M&G Prudential's merger and transformation programme, which remains on track to meet its objectives.
"In Asia we have delivered double-digit growth across our key metrics of new business profit, up 11%, IFRS operating profit, up 14%, and underlying free surplus generation, also up 14%. Our growth continues to be high quality with protection new business profit growing by 19 %, IFRS insurance margin up 17% and renewal insurance premiums up 17%. Our Asia asset manager, Eastspring, has increased IFRS operating profit by 13%.
"In our US life business, Jackson, variable annuity separate account assets were 10% higher than at June 30 2017, leading to a rise in fee income as we continued to meet the need of Americans for retirement income. In the UK and Europe, continued demand for M&G Prudential's differentiated product propositions has resulted in third-party net inflows of GBP3.5 billion for our asset management business, M&G, and net inflows of GBP4.4 billion in PruFund-related business.
Shares in Prudential were down 0.1% Wednesday at 1,755.00 pence each.
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