14th Aug 2019 10:31
(Alliance News) - Prudential PLC on Wednesday recorded strong growth in operating profit, again driven by its key Asian business.
The life insurance and financial services firm also confirmed its demerger of M&G Prudential will be complete in the fourth quarter.
M&G Prudential will be listed separately in London, also expected in the fourth quarter, and will change its name to M&G PLC.
M&G PLC will operate under two brands: Prudential and M&G Investments.
Prudential, under M&G PLC, will sell savings and insurance products to 5 million clients in the UK and Europe and offer asset management products to clients in South Africa.
M&G PLC's investment manager, M&G Investments, will continue to manage assets for global clients.
Prudential PLC Chief Executive Mike Wells said: "We believe that the demerger will enable both businesses to maximise their potential performance. Both will have experienced management teams better able to focus on their strategic priorities and distinct investment prospects, as well as improved allocation of resources and greater flexibility in execution."
Prudential hiked its interim dividend by 5% to 16.45 pence, which it said is in line with its dividend policy.
In the six months to June 30, pretax profit attributable to shareholders slipped 44% to GBP896 million from GBP1.60 billion the year before.
Prudential's operating profit from continuing operations, excluding soon-to-be-demerged M&G Prudential, registered 19% growth to GBP2.41 billion from GBP2.02 billion.
"I am pleased with our performance during the first half of the year. By focusing on key areas of sustained operational improvement and continued investment we have both delivered growth over the half year and positioned ourselves to deliver further growth, despite an uncertain geopolitical and macroeconomic outlook," said Wells.
Prudential's key Asian unit recorded 18% operating profit growth to GBP1.20 billion.
"Our multi-platform distribution in the region, with strong agency forces and bank partnerships, and growing digital channels, is continuing to drive our performance," the company said.
Wells noted Prudential is benefiting from growing demand for health, protection and savings across the region. The company said 8 of its 12 operating markets in Asia saw life insurance sales grow by at least 10%.
Annual premium equivalent new business sales in Hong Kong increased by 5%, in Singapore by 8% and in Malaysia by 3%. In Hong Kong, 63% of Prudential's sales came from visitors from mainland China.
In the US, Prudential's operating profit was up 21% to GBP1.22 billion, but the business saw a sharp drop in new business sales.
"Our approach in this market has been to proceed with discipline. Consumer regulation in the US, while now starting to become clearer, has been uncertain for some time, and has resulted in an industry-wide slowdown in variable annuity sales," the company explained.
The company's group new business profit in the first half increased 3.1% year on year to GBP1.64 billion from GBP1.59 billion.
Group annual premium equivalent new business - a measure of the new policies sold - increased 10% to GBP2.81 billion. Prudential's gross premiums earned in the first half also grew 10% year on year to GBP16.29 billion.
Prudential's group solvency II capital surplus was GBP16.7 billion, giving the company a cover ratio of 222%. A ratio of 100% means a company can meet all of its risk obligations.
Shares in Prudential were up 0.8% at 1,507.00 pence.
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