Prudential’s focus on Asia pays off as region generates higher profit for insurance giant
British insurance giant Prudential’s operating profit from its Asian operations jumped 14 per cent in the first half, higher than the 9 per cent increase from its overall operations, as its strategy to focus on the region is paying off.
The Hong Kong and London listed company said that overall operating profit amounted to £2.41 billion (US$3.1 billion) for the first half, while profit generated from Asia reached £1 billion.
The insurer, which has 15 million life customers worldwide, has turned its focus to Asia, where a large portion of the population is still not covered by any kind of insurance plans.
China is especially a bright spot among the Asian countries, as in recent years mainland Chinese residents have been flocking to Hong Kong to buy insurance plans as a way to transfer assets overseas amid Beijing’s tightening grip on capital outflow.
Prudential is a major insurance provider in the city, and operates through two locally incorporated companies in Hong Kong.
In March, the company announced that it would separate its UK and European operations – M&G Prudential – from its international business in a bid to better focus on fast growing markets including Asia and the US. M&G Prudential is to be listed on the London Stock Exchange and headed by its current chief executive John Foley.
While no specific timeline for the demerger has been given, the company said on Wednesday the plan was progressing well.
“We are taking the steps needed for the demerger of M&G Prudential from the group … and we are making good progress,” said Mike Wells, CEO of Prudential.
Wells also shrugged off fears of a full-scale China-US trade war and the upcoming Brexit on its operations, saying the company’s clients are spread globally and that the two issues should not bother the insurer too much.
“These political tensions might create a different path for the buyers, they take a little longer to make decisions, they worry a little more, but it doesn’t change the economic and structural need,” Wells said during an earnings call on Wednesday.
“[The trade war] is unfortunate, certainly not an outcome you want to see in a market place, but it’s not affecting us.”
The company increased its interim dividend by 8 per cent to 15.67 pence per share. Shares of the company were up 3.2 per cent in London trading on Wednesday.