Prudential tilting even more to the east

published 9 May 2012

Asia continues to be the engine of growth for insurance behemoth Prudential, while the significance of the UK diminishes.

Group sales on an annual premium equivalent (APE) basis rose 9% in the first quarter of 2012 to £964m from £888m.

Sales in Asia rose 21% to £443m from £367m in the first quarter of last year. The US saw sales rose 3% to £332m from £322m while the UK chipped in with £189m, down 5% from last year's £199m.

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New business profit rose 8% to £536m from £498m the year before, with Asia seeing 22% growth to £260m from £213m last year. That put the UK's performance in the shade; new business profit in what is still - despite unsubtle threats by the Pru's management to decamp - the insurer's home market fell 5% to £62m from £65m a year earlier. New business profit in the US eased 3% to £214m from £220m in the corresponding period of 2011.

Turning to investment flows, the Pru's M&G asset management arm saw gross inflows rise 1% year-on-year (y/y) to £7,009m from £6,919m, while net inflows climbed 5% y/y to £1,767m from £1,677m. Funds under management (FUM) at M&G rose 2% to £202.9bn at the end of March from £199.6bn a year earlier.

The Eastspring Investments unit in Asia saw gross inflows dip 4% to £2,174m from £2,267m in the first quarter of 2011, while net inflows jumped 63% to £349m from £214m the year before. FUM at Eastpsring at the end of March stood at £53.4bn, up 3% from £51.7bn the year before.

Tidjane Thiam, Group Chief Executive, said that the Pru's multi-channel platform is a key part of its strategy in Asia.

"In bancassurance, new business profit grew 40 per cent in the quarter thanks to the success of our partnerships across the region, highlighting the long-term potential of this channel. In parallel, our agency distribution continues to deliver a strong performance with agency new business profit up 17 per cent in the quarter," Thiam revealed.

The insurance group directive (ID) surplus at the end of the first quarter was estimated at £3.8bn, after deducting the 2011 final dividend. This compares to £4.0bn at the end of 2011, stated before deducting the 2011 final dividend of £0.4bn. The IGD seeks to specify minimum capital requirements for general insurers.

"The economy in the US has shown signs of improvement and Asia has been more resilient than expected. With our limited exposure to the countries of the Eurozone, our leading presence in Asia and our strong businesses in the US and in the UK we are well positioned and this is demonstrated clearly by these first quarter new business results," Thiam claimed.

"We remain on-track to achieve our 2013 'Growth and Cash' financial objectives and, despite significant ongoing macro-economic uncertainty, we look forward to the rest of the year with confidence," he added.

The shares were down 9.5p to 701p following the interim management statement.