Asia continues to be the driving force behind growth at insurance giant Prudential, as the US and European businesses battle weakening economic conditions.
"Asia delivered a 21% rise in IFRS [international financial reporting standards] operating profit and an 18% rise in new business profit. Importantly, Asia's cash contribution to the group was £126m, an increase of 20%, and evidence that our business in Asia continues to deliver both growth and cash for our shareholders," said the Pru's Chief Executive, Tidjane Thiam, in the insurer's results statement covering the first half of 2012.
The IFRS scorecardTotal revenue, net of reinsurance, rose to £23,881m in the first half of 2012 from £21,603m in the first half of 2011.
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Profit before tax rose to £1,299m from £1,208m the year before, while diluted earnings per share advanced to 37.5p from 32.6p the year before.
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Operating profit was up 13% to £1,162m from £1,028m a year earlier, in line with (post-tax) profit attributable to shareholders, which climbed to £1,259m from £1,114m the year before. This beat broker Panmure Gordon's forecast for IFRS operating profit of £1,095m.
European Embedded Value scorecardUsing the European Embedded Value (EEV) guidelines for insurance company valuation, operating profit came in at £2,109m, versus £2,147m the year before. Panmure Gordon had forecast headline European Embedded Value operating profit of £2,160m, up 1% on the first half of 2011.
Asia operations saw EEV operating profit surge to £903m from £815m in the first half of 2011. The US operations' operating profit dipped to £822m from £848m the year before while the UK operations' operating profit slipped to £706m from £757m, including an unchanged contribution from asset management arm M&G of £199m.
Shareholders' equity at end of period (excluding non-controlling interests) advanced to £20,605m from £19,637m at the end of 2011, equivalent to 806p per share.
Management commentary"Prudential has produced a strong performance across our key financial metrics during the first six months of 2012 - IFRS, NBP [new business premiums] and cash, despite the considerable global macroeconomic challenges," Thiam said.
"Net cash remittances from our business units to the group have grown in line with our strategy and we retain one of the strongest capital positions in the sector," he added.
Turning to the M&G asset management business, Thiam said M&G had delivered a particularly good performance in a difficult investment market, with net inflows of £4.9bn. Funds under management at M&G were broadly unchanged from the year-end figure of £203bn at £204bn.
Thiam, whose desire to take over Asian insurance giant AIA was thwarted by a shareholder revolt, remains convinced that South-east Asia is where the best growth opportunities lie.
"Long-term savings and protection businesses such as ours are playing an integral role in the economic and social transformation that has only just started to take place, and will deliver growth for many years to come, long after the current worries that beset the global economy have passed. For this reason, we remain confident in our ability to grow earnings over the long-term while continuing to create value for our shareholders," Thiam said.
The interim dividend has been increased to 8.40p from 7.95p, slightly more generous than the 8.35p Panmure Gordon had been predicting.
The shares were down 7p at 797p at 11:00am.
JH
