Prudential boosted, partly by HK surge
Hong Kong-listed British insurer Prudential reported a better than expected interim operating profit of GBP1.06 billion (HK$13.52 billion), up 25 per cent year on year.
Prudential group chief executive Tidjane Thiam said the growth was mainly driven by new policies sold, particularly in Asia.
'We have continued to concentrate on the fast-growing and highly profitable markets of Southeast Asia, and the positive momentum of 2010 has been maintained during the first half of this year, with new business profit up 17 per cent in Asia and 22 per cent in Asia ex-India,'' Thiam said.
He said both the Hong Kong and mainland markets had recorded strong growth in new sales. 'We are bullish about our business growth in Hong Kong and mainland China, which are great markets recording very good growth,' Thiam said.
Thiam said Hong Kong had posted double-digit growth in the first half of this year. The company had more than 4,000 agents, making it the city's second-largest insurance sales team behind AIA.
Prudential in Asia uses both agents and bank partners to sell policies, and teams up with Standard Chartered Bank in Hong Kong.
Profit grew in its major markets of Hong Kong, Singapore, Malaysia and Indonesia. 'Agency (insurance) will remain the most profitable channel in Asia for many years to come,' he said. 'We will also develop more our bancassurance channel which now represents 30 per cent of all sales in Asia,'' he said. On the mainland, the company plans to expand its joint-venture life insurer Citic-Prudential, which already has 12,900 agents.
The group's overall Asia new business profit grew 17 per cent year on year to ?465 million, making it the biggest contributor to global coffers in the first half. The only disappointment was India, where new sales in the first half fell 61 per cent year on year due to a regulatory change.
The US market was next, with profit from new business reaching ?458 million in the first half, up 27 per cent year on year. In the UK, new business profit stood at ?146 million in the first six months, up 8 per cent.
Despite the strong result, Prudential's share price yesterday closed 2.75 per cent lower at HK$81.5, dragged down by the wave of selling which hit Asian markets.
Thiam said he was not worried the volatile markets would hit Prudential's profits, saying it had reduced its exposure to higher risk equities and held little European sovereign debt.
He said Prudential's major business growth relied on sales of new business and not on investment income. 'We remain cautious about the outlook for the US and euro zone but we believe our growth in Asia will allow us to deliver our 2013 targets on new business growth and profits,'' Thiam said.
Ben Kwong Man-bun, chief operating officer of KGI Asia, was less upbeat, saying volatile stock and bond markets would affect all insurance and financial companies and Prudential could not be an exception.
'It is not going to be easy for all financial firms in the second half of this year as they will find it hard to make money from their own investments, and they will also find it hard to sell investment-related products,' Kwong said.
