Strong momentum in its Asian business has helped insurer Prudential ride out the current era of low interest rates and produce a 9 per cent jump in operating profits.
The Pru’s interim profit of £2.06 billion announced yesterday outstripped City consensus forecasts of £1.88bn. Mike Wells, group chief executive, said the performance had been achieved in the teeth of “heightened macro-economic, geo-political and investment market uncertainty and volatility”.
Operating profits in Asia, where Prudential has expanded strongly in recent years, lifted 18 per cent to £743 million while Asia new business profit rose 24 per cent to £824m.
Wells said: “At the group level, the immediate impact of Brexit will not be material. Asia has been and will continue to be the growth engine of this group.” Shares in the company closed up 2.3 per cent at 1,423.5p. The UK business, which includes more than 2,000 workers at the Craigforth site north of the Border, saw profits rise a modest 3 per cent to £730m amid the upheaval in the pensions industry and the “onerous capital impact” of the Solvency II scheme. UK life profits rose 8 per cent to £473m.
Profits in Prudential’s UK fund management arm, M&G Investments, fell 10 per cent to £225m in the first six months of the year as customers continued to withdraw their money.
It comes after M&G Investments temporarily suspended trading in a commercial property fund last month after investors moved to pull out of the sector following the June Brexit vote.
Anne Richards, M&G chief executive, said the company could increase the number of funds based in Dublin and Luxembourg, depending on the outcome of Brexit negotiations.
“What we are trying to do is give ourselves options so we are in a position to react and adapt,”Richards said. M&G said shortly after the Brexit vote in June that it was weighing up expanding its operations in Dublin.
Under current rules, fund managers need an EU base to sell investments to continental European retail investors, but it is not clear how this will work when the UK leaves the single trading bloc.
Pru’s interim dividend rises 5 per cent to 12.93p. Barrie Cornes, an insurance analyst at Panmure, described the results as “excellent”.
Eamonn Flanagan, an analyst with Shore Capital, said: “Almost each of the key financial metrics were ahead of both our and the market’s expectations, demonstrating the resilience of Pru’s position and reach across the main financial markets of the US, UK and Asia.”
• UK insurer Aviva revealed yesterday that its £1.8bn commercial property fund is set to remain suspended for “at least six to eight months” as it seeks to sell properties. “Property sales may be more difficult to execute in the current environment due to market uncertainty”, it said.