Shares in Prudential (LON:PRU) have spiked more than two percent in London this morning, with investors welcoming a rise in full-year profits. The blue-chip group benefited from strong growth in the US and Asia, which helped offset a sluggish performance at home.
As of 09:21 GMT, Prudential’s share price had added 3.23 percent to 1,718.25p, outperforming the broader London market, with the benchmark FTSE 100 index currently standing 0.09 percent higher at 7,373.35 points. The group’s shares have gained more than 27 percent over the past year, and are up by some five percent in the year-to-date.
Prudential announced in a statement this morning that its IFRS operating profit had climbed to £4.26 billion last year, up from £4 billion in 2015, led by double-digit growth in Asia, where profits rose 15 percent to £1.6 billion. US life insurance IFRS operating profit meanwhile advanced eight percent to £2 billion. The company, however, noted that its performance in the UK had been impacted by its decision to withdraw from the bulk annuity market, as well as by negative fund flows at its M&G business.
The Pru further reported that its Solvency II surplus was estimated at £12.5 billion, or equivalent to a cover ratio of 201 percent, and announced a full-year ordinary dividend of 43.5p per share, up 12 percent.
“Prudential has delivered a strong financial performance in 2016,” the company’s chief executive Mike Wells commented in the statement, adding its performance had been driven by Asia. He also reassured investors that the group’s businesses in the US and the UK remained “well positioned to navigate a period of significant regulatory change”.
Proactive Investors quoted Richard Hunter, head of research at Wilson King Investment Management, as commenting that the Pru had delivered another set of solid figures but that the negative retail outflows in the M&G business and the impact from the withdrawal from the annuities business were mild disappointments.
“The immediate future will also pose issues, with the ramifications of Brexit likely to unfold, a rise in US interest rates not necessarily working to Prudential’s advantage and the cost of regulation rising as challenges,” Hunter pointed out, adding, however, that the FTSE 100 group’s “exposure to a rapidly expanding middle class in Asia with an increasing need for insurance is a visible strength,” while “the savings and pension requirements of both the US and UK populations should further play into its hands”.