Profits at the Pru approach £3bn

Boosted earning in US and Asian markets have offset tougher conditions in the UK. Picture: Chris Young.Boosted earning in US and Asian markets have offset tougher conditions in the UK. Picture: Chris Young.
Boosted earning in US and Asian markets have offset tougher conditions in the UK. Picture: Chris Young.
Prudential yesterday posted a jump in annual profits to almost £3 billion as it extended a deal to sell its life insurance products through banking giant Standard Chartered’s branches in Africa and Asia.

The insurer, which employs some 2,000 people at its base in Stirling, shrugged off recent emerging market woes as it posted a 17 per cent hike in annual earnings thanks to another robust performance from its overseas businesses.

It brushed aside this year’s currency turmoil across emerging markets as short-term challenges and said it stands to benefit when these regions adjust to life after the United States’s multi-billion dollar money-printing drive is withdrawn.

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A surge in earnings across Asia and the US helped offset tougher conditions in the UK, where earnings flat-lined after being hit by last year’s industry shake-up on financial advice.

UK retail sales tumbled 23 per cent to £176 million as the Retail Distribution Review (RDR) hurt sales of investment and with-profit bonds. Prudential claimed it was a “resilient performance” from the UK arm amid an industry facing “considerable regulatory change”.

The group also announced the extension of its partnership deal with Standard Chartered bank to distribute life assurance products, with a new 15-year tie-up that will also expand the relationship into markets such as Africa.

The insurer, which was founded in London in 1848, hailed its strategy to tap into Asia’s expanding and increasingly-wealthy middle class, as well as the baby boomers in the US and Britain’s ageing population.

It added there had “clearly” been some impact of weak Asian currencies against a stronger pound, particularly the Indonesian rupiah.

Some emerging market currencies have been thrown into turmoil in recent months by America’s move to scale back its quantitative easing drive.

But Prudential said: “We believe that the economic fundamentals of these economies remain very attractive in the long term and that the tensions observed currently will actually contribute to the long-term stabilisation and growth of these economies by improving their trade balances and ultimately their current account balances.”

Its M&G investment management business saw earnings rise 23 per cent to £395m, despite a £700m outflow of funds in the UK after it took action to slow flows into its flagship corporate bond funds.

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Prudential also said it was looking at launching into Saudi Arabia, following expansion into four new markets over the past two years, including Cambodia, Poland and most recently Ghana.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: “The flat operating profit in the UK has been more than adequately covered by strong performances in Prudential’s other key geographies.

“Further out, the prospects remain bright, with the group’s key demographics playing into Prudential’s hands – an emerging middle class in Asia, the US baby boomers requiring servicing, and an ageing population in the UK paying closer attention to its retirement needs.”