Prudential Gains as Asia Growth Drives Insurer’s Profit Beat

Updated on
  • Asia profit jumps 15 percent in six months through June
  • M&G investment unit sees $9 billion of outflows in period

Asia Business Helps Prudential Beat Profits

Prudential Plc posted a 6 percent increase in first-half profit as a jump in earnings at its Asia business helped the U.K.’s largest insurer to beat analyst estimates. The shares climbed to an almost four-month high.

The company reported operating profit of 2.06 billion pounds ($2.69 billion) in the first six months of year, the statement showed Tuesday. That topped the 1.88 billion-pound average estimate of 18 analysts survey by Prudential. Its Asia business increased profit 15 percent to 743 million pounds and the company lifted its dividend by 5 percent to 12.93 pence per share.

Prudential has delivered good progress “in a period of heightened macro-economic, geo-political and investment market uncertainty and volatility,” Chief Executive Officer Mike Wells said in the statement. It’s “led by double-digit growth in Asia. In the U.S. and the U.K., we continue to successfully manage the effects of market turbulence.”

The insurer has fared better than its U.K. competitors, including Legal & General Group Plc and Aviva Plc, since Britain voted to leave the European Union because it generates much of its earnings in Asia. While other insurers have slumped, Prudential is up about 4 percent since June 23 and the shares were trading at 1,412 pence at 10:28 a.m. in London.

Even so, the company has not been completely immune from the shock result of the referendum after its M&G investment unit was hit with almost 7 billion pounds of net outflows in the first half. That reduced operating profit at the unit by 10 percent, Prudential said. A spike in redemption requests from retail investors forced the asset manager to suspend trading of its 3.96 billion-pound U.K. Property Portfolio fund last month.

Prudential’s U.K. life unit reported an 8 percent increase in operating profit to 473 million pounds, even as it wrote less annuity business. Its Solvency II ratio was 175 percent based on a capital surplus of 9.1 billion pounds, down from a 193 percent ratio at the end of December.

In the U.S., Jackson National Life’s operating profit fell 3 percent to 876 million pounds.

(Updates to include detail on M&G from fifth paragraph.)
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