Prudential’s Share Price Up on 22 Percent Profit Rise

on Aug 12, 2013
Listen Monday, August 12th: Prudential (LON:PRU) today reported a 22 percent increase in operating profit for the first half of the year mainly due to fast-growing operations in Asia and increased income from the US. The UK insurer’s £1.415 billion profit is spot-on with Barclays’ analysts’ forecast for £1.4 billion.

“The Group’s profitable growth has again been led by Asia,” CEO Tidjane Thiam said in a statement. Operating profit in the region increased by 18 percent, net cash remittances by 51 percent, and new business profit by 20 percent.
Back in 2010, the company set six objectives to be met by the end of 2013. By the end of last year, Prudential had already achieved two of them – the Asian division had doubled its 2009 operating profit and delivered over £300 million of net cash remittances to the Group. During H1 2013 the company completed two more of these objectives – first, its US unit, Jackson National Life Insurance Company, delivered £294 million cash, exceeding the target of £260 million and second, the Group surpassed its four-year cumulative net cash remittance objective of £3.8 billion by £300 million. Thiam said that he was confident that the company could achieve the two remaining objectives by the end of the year – the Asian unit to double its 2009 new business profit by 2013 and the UK division to deliver £350 million net remittances for the year.

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The US market has also been strong with the company benefiting from the transition into retirement of the ‘baby-boomer’ generation. The acquisition of Swiss Re’s US Admin Re company (REALIC) back in September 2012 has also started paying off during the half-year period. The company recorded a 32 percent increase in profit before tax for the first half as compared to the same period in 2012. The emphasis at Jackson National Life Insurance Company remains on increasing operating profit and cash generation with a strong pricing discipline and low risk appetite.

Prudential’s asset management business, M&G, also delivered a very strong performance and increased its operating profit by 17 percent to £204 million – a record half-year result. Funds under management increased to £234.3 billion from £203.7 billion at June 30, 2012.
The interim dividend for the first half of 2013 rose to 9.73p, up 15.8 percent from H1 2012.

Operating profit in the UK increased by only 1 percent to £341 million but the company said it hoped that the ageing population would provide them with additional opportunities to generate more value and revenue.
**Prudential PLC’s shares opened at 1,186.00p, little changed from Friday’s closing price of 1,184.00p. As soon as the company released its interim report, investors stepped up buying and the price rose as high as 1,229.00p as of 09:44 BST. Buying slowed down afterwards and the price eased to 1,215.00p as of 12:52 BST**


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