- First-half results top estimates
- Bigger dividends and buybacks
- Indian unit to IPO later this year
It has been a good year for shareholders in insurance giant Prudential (PRU), with the stock having gained over 50% to make it the sixth-best performer in the FTSE 100.
Therefore, it was no surprise that although the group posted forecast-beating first-half results, the reaction was muted, with the shares inching up just 9p or 1% to 983p.
RESULTS BEAT ESTIMATES
For the six months to the end of June, average premium equivalent income was $3.29 billion, marginally ahead of the $3.27 billion consensus, while new business profit of $1.26 billion was also marginally ahead of the $1.24 billion average forecast.
The beat continued down the P&L, with adjusted operating profit of $1.66 billion and operating earnings per share of $0.493 around 1% ahead of estimates, although the dividend of $0.077 per share was in line with consensus.
‘We are pleased with our strong performance in the first half of 2025, delivering double-digit growth across our key metrics in line with the guidance we gave earlier in the year,’ commented chief executive Anil Wadhwani.
‘We have reached the inflection point in our capital generation, enabling us to update our capital management programme and increase shareholder returns, which validates our business model and its ability to generate sustainable cash returns.
‘Reflecting our strategic progress and investments in the growth drivers of the business, we are confident we will carry this momentum into the second half and beyond, keeping us firmly on track to achieve our 2027 financial objectives.’
INCREASING RETURNS
At the end of the half, the firm said it had surplus capital of $16.2 billion, equivalent to a coverage ratio of 267%, which would allow it to step up its shareholder returns.
Ordinary dividends are set to increase by more than 10% per year from 2025 through 2027, while between 2024 and 2027 the firm expects to return more than $5 billion in the form of share buybacks, with $500 million scheduled for next year and $600 million for 2027 on top of the existing $2 billion programme.
In addition, the group intends to return the initial net proceeds from the potential $12 billion IPO (initial public offering) of shares in ICICI Prudential Asset Management when it lists in India later this year.
