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Prudential H111 profit up 25%

Prudential Plc , Britain’ biggest insurer, reported a bigger-than-expected 25 percent rise in half-year profit, helped by strong growth in highly profitable Southeast Asian markets.

Prudential made an operating profit of 1.06 billion pounds in the first six months of 2011, compared with 968 million pounds a year earlier, the company said on Friday.

Analysts had expected a profit of 963 million pounds, according to a consensus analyst forecast compiled by the company.

“We expect to see continued, profitable and cash generative growth in the second half of 2011,” the insurer said in a statement posted on the Hong Kong exchange. “We remain on course to deliver the 2013 profit growth and cash generation objectives.”

New business profit rose 20 percent to 1.07 billion pounds. It gained 25 percent to 2.03 billion pounds in the full year of 2010. Embedded value shareholders’ funds, which is the estimated net worth of a life insurer less some assumptions, rose 14 percent to 19 billion pounds. Annual premium equivalent, which includes all annualised first-year premiums and 10 percent of single premium products, rose 10 percent to 1.8 billion pounds.

Prudential relies on cash generated by its legacy UK business to fund rapid growth in the booming economies of Asia, which account for about 45 percent of its sales. Indonesia is now its largest business in Asia by sales, with more than 100,000 agents in the country, Prudential said. The company last year set itself ambitious profit and cash generation targets and hiked its dividend to appease shareholders angered by a failed $35.5 billion bid for Asian rival AIA. The botched takeover left Prudential to shoulder 377 million pounds in costs, and led some shareholders to call for chief executive Tidjane Thiam and chairman Harvey McGrath to quit. More than a fifth of shareholders voted against the reappointment of McGrath at Prudential’ annual general meeting in May, in a sign of lingering investor discontent.

Prudential shares closed at 630 pence in London on Thursday, valuing the company at about 16 billion pounds. The shares have fallen 5.8 percent in the year to date, outperforming a 10 percent fall in the Stoxx 600 European insurance index.

Performance Summary

  • H111 op profit at 1.06 bln pounds vs 963 mln pounds forecast
  • H111 new business profit up 20 pct to 1.07 bln pounds
  • H111 embedded value up 14 pct at 19 bln pounds
  • H111 APE up 10 pct to 1.82 bln pounds


Source: Reuters