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Prudential Plc FY18 results: Asian business shines

20 March 2019

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by Anchor

The UK’s biggest insurance provider, Prudential Plc reported FY18 results on Wednesday (13 March), which showed that profit before tax and profit for the year rose 14% and 30% YoY, respectively, to GBP3.6bn and GBP3bn.

Group operating profit came in at GBP4.8bn – up 3% YoY. In terms of regions operating profit was reported as follows: 

Asia – GBP2.2bn, up 14% YoY and offsetting the weaker US performance. Prudential operates in Asia through a 50/50 joint venture (JV) with Citic, a financial services group in China. However, the Chinese government recently relaxed its rules on ownership, allowing foreign insurers to buy up to 51% of their JVs in the country, with CEO Mike Wells noting that “If they were willing to sell, we’d be a willing buyer,”.

US – The US business, Jackson, lagged reporting operating profit of GBP1.9bn, down 11% YoY.

UK and Europe – GBP1.6bn, up 19% YoY.

Wells described the firm’s 2018 financial performance as again being “led by our Asia operations,” which is “ … testament to the scale of our opportunity set, the depth of our capabilities, and our unrelenting focus on executing our strategy at pace.” Prudential also announced the acquisition of a majority stake in an African life insurer, Group Beneficial, which has 300,000 customers in the Ivory Coast, Cameroon and Togo.

The firm said that it had transferred GBP36bn in customer assets to its new Luxembourg subsidiary ahead of Brexit. The head of Prudential’s UK business M&G Prudential, John Foley said the insurer had spent GBP27mn on setting up the new Luxembourg operation, which currently has 35 staff. Wells said that the company is “proceeding at pace” with plans to spin off M&G Prudential through a stockmarket listing – a demerger which was originally announced c. 12 months ago. Reuters writes that market sources expect the listing to happen before the end of the year.

Prudential also announced a FY18 DPS increase of 5% YoY to GBp49.35. However, this was below a forecast of GBp50.36.

The share price is up c. 16% YTD.

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