Pru says retail investors are returning in force

New business in the UK and the US overshadowed growth in Asia, for once, at insurance giant Prudential in the third quarter.

Sales on an annualised premium equivalent (APE) basis in the third quarter rose 19% to £1,048m from £880m a year earlier.

Sales in Asia rose 6% to £429m in the third quarter, but growth picked up after the end of the reporting period, with APE growth of 165 year-on-year.

UK sales jumped 28% to £205m, a growth rate only marginally behind the 31% increase in US sales to £414m.

Total group new business profit rose 28% to £597m from £466m the year before. Asia's new business profit was up 11% to £281m from £254m. The US grew its new business profit by 47% to £241m while the UK upped its game by 56% to £75m.

The group's asset management operations, spearheaded by M&G, are going gang-busters, with net inflows in the first nine months of the year of £12.3bn. Of those net inflows, £7.0bn came in the third quarter alone, with M&G accounting for £6.4bn.

"This is our best ever performance at the nine month stage surpassing the historically high level of net inflows achieved in 2009," revealed Group Chief Executive Tidjane Thiam.

"M&G has benefited from its strong investment performance and broad range of attractive funds across asset classes as retail investors, particularly those in continental Europe, are starting to invest again after a period of extreme risk aversion observed in 2011," Thiam added.

Funds under management at M&G were up 12% at £216.9bn from £194.4bn a year earlier, while at Eastspring Investments they were up 13% to £56.0bn from £49.5bn at the end of September 2011.

Consumer demand for variable annuities has been so strong the Pru's appetite for more sales in 2012 has almost been sated, such that it has taken steps to limit them. The group expects full year sales of guaranteed variable annuities in 2012 to be between $18bn to $18.5bn.

The group's insurance group directive (IGD) surplus at the end of September was estimated at £4.1bn, up from £3.9bn a year earlier. The IGD sets out minimum capital requirements for insurance companies.

"The global macroeconomic environment remains challenging with persistently low government bond yields and recently we have also seen the IMF downgrade global growth forecasts. Although we remain defensively positioned, we are focused on the long-term profitable growth opportunities available to us, particularly in South-east Asia," Thiam asserted.

"We are making progress towards the 'Growth and Cash' objectives we set ourselves for 2013 and remain on track to achieve these objectives, despite the considerable macroeconomic headwinds we face. We are well positioned to grow profitably over the long-term and to create value for our shareholders," Thiam added.

JH