Prudential Jumps to Record as Profit Beats Forecasts on Asia

Prudential Plc surged to a record in London trading after the U.K.’s biggest insurer by market value reported first-half profit that beat analyst estimates, buoyed by rising sales in Asia and a jump in U.S. earnings.

Operating profit climbed 22 percent to 1.42 billion pounds ($2.2 billion) in the first six months, the London-based insurer said in a statement today. That beat the 1.3 billion-pound estimate of 17 analysts provided by the company. The stock surged to the highest since at least 1988 as the firm raised its dividend and posted record profit for its fund management unit.

“There is still plenty of potential in that share price,” Chief Executive Officer Tidjane Thiam said on a conference call with reporters from London. Today’s results “provide further evidence of our ability to deliver both earnings growth and cash. We look forward to the rest of the year with confidence.”

The stock, which has more than doubled since Thiam became CEO in October 2009, advanced 4.1 percent to 1,232 pence in London. That’s bringing gains this year to 42 percent, compared with a 23 percent increase for the FTSE 350 Insurance Index.

Record Sales

Thiam, 51, said the insurer has achieved four of the six 2013 objectives that were set out in 2010, and remains on track to achieve the last two, which include doubling Asia’s 2009 operating profit by year end. Asia reported a 18 percent jump in the first half, with seven of its units in the region posting record sales in the second quarter.

Asia remains a “significant driver” of earnings for the company, according to Thiam, given the rebalancing of global economic growth toward the region and low penetration rate of insurance policies in countries such as the Philippines and Vietnam. The CEO said the insurer is close to completing the reorganization of is Asia business into one single legal entity, potentially making it easier to sell in the future.

“Rebalancing is under way of the world economy, it’s rapid and substantial,” Thiam told reporters. “One of our successes as a group has been an early recognition of this.”

New business profit, or NBP, in Asia jumped 20 percent to 659 million pounds from a year ago. Sales of life insurance products rose 42 percent in China, 38 percent in the Philippines and Korea and 28 percent in Vietnam, the company said.

‘Strong Results’

It was “a characteristically strong set of results from Prudential, with continued strong growth in operating profits from the major growth engines” of Asia, the U.S. and asset management, Christopher Esson, a London-based analyst at Credit Suisse Group AG with an outperform rating on the stock, wrote in a note. “With NBP remaining on a strong trajectory in Asia, forward momentum is likely to remain robust.”

Operating profit from Jackson National Life, Prudential’s U.S. business, jumped 32 percent to 582 million pounds in the first half, helped by sales of Elite Access, a variable annuity product. Thiam said the company will benefit from the retirement of America’s 77 million baby boomers, adding that he remains “open minded” to the future of the U.S. division including a potential sale.

In the U.K., Prudential’s fund management arm M&G increased operating profit 17 percent to a record 204 million pounds as the business reported net inflows of 4.8 billion pounds, boosted by increased sales in continental Europe.

Prudential raised its interim dividend 16 percent to 9.73 pence a share.

Before it's here, it's on the Bloomberg Terminal.