Prudential PLC on Wednesday labelled its first-half performance as resilient, though the Asia-focused insurer said it faced tough macro conditions and Covid-19 disruption.
New business profit suffered, held back by its showing in Hong Kong, though total new policies sold advanced, thanks to Pru’s ‘diversified geographic footprint’. Market conditions may be ‘challenging’ in the remainder of the year, it cautioned.
In the six months to June 30, group attributable pretax profit slumped to $300 million from $1.26 billion.
Gross premiums earned were 6.2% higher year-on-year at $12.24 billion from $11.52 billion.
Pru noted it booked a negative $1.38 billion ‘short-term fluctuation’ in investment returns, hitting profit, which is much worse than the negative $212 million seen a year prior.
The adjusted bottom-line measure did not include that hit. Adjusted pretax profit rose 5.7% year-on-year to $1.66 billion from $1.57 billion.
Annual premium equivalents - a measure of the new policies sold - advanced 6.2% to $2.21 billion from $2.08 billion. The improved APE sales performance reflected a ‘diversified geographic footprint, product mix and distribution channels’, the insurer explained.
New business profit, however, slipped 6.6% to $1.10 billion from $1.18 billion.
‘The benefit of higher APE sales was offset by the impact of higher interest rates under our [European Embedded Value] methodology, lower sales in Hong Kong, where margins have traditionally been higher, and an increase in bancassurance sales,’ Prudential said.
Bancassurance is the sale of insurance products to banks.
Prudential posted total revenue, net of reinsurance, of negative $13.00 billion, swinging from $11.69 billion. It posted an investment hit of $24.57 billion for the half, swinging from a return of $738 million a year earlier.
Interim Chief Executive Mark FitzPatrick said: ‘Our resilient operational performance demonstrates the strength of our well positioned and well diversified franchise across the Asia region, driven by our multi-channel, digitally enhanced distribution platform.’
Anil Wadhwani will take over as CEO of Prudential in February next year. The appointment of the Manulife Financial Corp executive was announced in May.
Pru declared an interim dividend of 5.74 US cents, up 7% year-on-year and equal to one-third of its previous full-year dividend of 17.23 cents per share.
APE sales rose in most of Pru’s markets. One of the bigger detractors, however, was in Hong Kong.
‘Agency sales were disrupted by Covid-19-related restrictions over much of the first quarter,’ it explained.
Looking ahead, the company said: ‘Although there are signs that Covid-19-related impacts in many of our markets are stabilising, over the remainder of the year we expect that operating conditions may continue to be challenging.
‘We remain confident that Prudential has the financial resilience, capital strength and capability to meet the growing health and savings needs of our customers in Asia and Africa. By doing so, we believe we will deliver on our purpose to help people get the most out of life and also build value for our shareholders over the long-term.’
Shares in the company were 0.2% lower at 987.20 pence each in London on Wednesday morning.
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