10th Mar 2015 07:25
LONDON (Alliance News) - Prudential PLC Tuesday reported a big increase in profit for 2014, helped by growth in its key Asian markets, the UK and the US, but the results were overshadowed by news that Chief Executive Tidjane Thiam will leave to become the new CEO of Swiss bank Credit Suisse AG.
Credit Suisse confirmed media reports that its current Chief Executive Brady Dougan is to step down and will be replaced by Thiam in June. However, his replacement is yet to be confirmed, despite reports that Mike Wells, an executive director and the CEO of its Jackson National Life Insurance Company, is to succeed him at the helm. Thiam said he is looking forward to presenting Prudential's first quarter results for 2015 and attending his final annual meeting of shareholders as the insurer's chief.
"As would be expected of a FTSE 100 company, the board is always focused on succession planning and a process has already examined a range of external and internal candidates. We are fortunate to have a very strong management team across the group and we have identified a successor and expect to be able to announce a new CEO once the regulatory approval process has been completed," Paul Manduca, chairman, said in a statement.
Prudential reported a net profit of GBP2.22 billion for 2014, up from 1.35 billion in 2013, while its closely-watched operating profit rose 14% at constant exchange rates to GBP3.19 billion. Total revenue, net of reinsurance, rose to GBP60.13 billion, driven up by higher gross premiums earned better investment return. Benefits and claims were also higher, increasing to GBP50.74 billion from GBP42.23 billion, the main reason for total charges, net of reinsurance, increasing to GBP57.28 billion from GBP50.44 billion.
Prudential raised its full-year dividend by 10% To 36.93 pence a share.
Operating pretax profit based on longer-term investment returns, a figure closely watched by analysts, rose by 8% to GBP3.19 billion, bolstered by double-digit growth in long-term business operating profit in the US, and single-digit growth in the UK and Asia. However, at constant currency, Asia also showed double-digit growth, as currencies in some of its "sweet spot" markets depreciated.
Led by Thiam, Prudential has embarked on a strategy of growth in the US, where it aims to provide income in retirement to the 'baby boomer' generation, while expanding its presence in Asia, where it has been targeting the growing middle class. The departing chief executive had planned a USD35 billion acquisition of AIA, the then Asian business of US insurer AIG, in 2010, but the deal collapsed after opposition from shareholders. AIA proceeded with a public listing on the Hong Kong Stock Exchange, helping AIG to sell the remainder of its stake. The strong rise in AIA's share price since it listed in Hong Kong has been the source of much regret for Thiam.
"The group delivered a strong performance in 2014. We continued to grow across our key metrics despite the challenges presented by historically low long-term interest rates in the US and the UK, major currency discontinuities in some of our key Asian markets and unprecedented regulatory changes in the UK life market," Thiam said in a statement.
Prudential was also optimistic about the outlook, based on the recovering economies of the US and UK and the prospects for life insurance in Asia.
"Looking ahead, the economic environment in the US and the UK appears to show signs of improvement. Furthermore, we are optimistic about the outlook for the emerging economies of Asia, where the long-term fundamentals of our life insurance business remain compelling. We continue to see strong economic growth and increasing demand for insurance from a rapidly growing and prosperous middle class which is under-insured," it said.
By Steve McGrath; [email protected]; @stevemcgrath1
Update by Samuel Agini; [email protected]; @SamuelAgini
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