Prudential share price dips as CEO departure overshadows profit growth

Prudential (LON:PRU) today reported a double-digit increase in annual profit, but the results were overshadowed by news that the insurer’s chief executive, Tidjane Thiam, will leave to become the new CEO of Swiss bank Credit Suisse AG.

Prudential’s net profit for 2014 almost doubled to £2.22 billion from £1.35 billion in 2013, while its closely-watched operating profit rose 14 percent at constant exchange rates to £3.19 billion. Total new business profit on a European Embedded Value (EEV) basis was 10 percent up on a constant currency basis to £2.13 billion.
The insurer said its Asian new business profit rose 13 percent to £1.16 billion, while its portfolio of life businesses in the region delivered a combined operating profit of £1.05 billion, 16 percent up year-on-year. The company lifted its full-year dividend by 10 percent to 36.93p a share. Looking ahead, Prudential voiced an optimistic outlook, based on the recovering economies of the US and UK and the prospects for life insurance in Asia.
In a separate statement released today, Prudential also confirmed media reports that its CEO is stepping down, having been poached by Credit Suisse to replace the bank’s long-standing chief executive Brady Dougan. Thiam, who has led Prudential since 2009, had told the board of his plan to step down this year, the company said. The group is hinting that Thiam’s successor will be an internal appointment, with Mike Wells, the head of Jackson National Life Insurance, Prudential’s American operation, rumoured to be a front-runner.
Prudential’s share price opened more than two percent lower this morning. By 08:06 GMT, the stock had slumped 3.22 percent to 1,610.00p. According to the Financial Times, the 17 analysts projecting 12 month price targets for the FTSE 100-listed firm, have a median target of 1,775.00p, with a high estimate of 1,891.00p and a low of 1,380.00p. As of 7 March 2015, the consensus forecast amongst 22 polled investment analysts covering Prudential has it that the company will outperform the market.
As of 08:31 GMT, Tuesday, 10 March, Prudential plc share price is 1,614.25p.