Asia drive bears fruit for Prudential

Mon Aug 12, 2013 8:58am EDT
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By Tommy Wilkes

LONDON (Reuters) - British insurer Prudential (PRU.L: Quote) reported a 22 percent jump in its first-half profits on Monday, underscoring the appeal of its Asian business and bolstering chief executive Tidjane Thiam's decision to bet on the fast-growing region.

The results, which were slightly ahead of analyst forecasts, helped push Prudential's shares to an all-time high. The 165-year old company also cheered investors with a 16 percent hike in its interim dividend.

The results will do much to restore the reputation of Thiam, which took a serious knock after an ill-fated Asian takeover attempt in 2010.

While insurers from across Europe have enjoyed a strong start to 2013 - buoyed by rising investment returns and longer-term trends of an ageing population demanding more retirement income - Prudential has been among the sector's best performers because of its diversification beyond European shores.

More than four-fifths of Prudential's sales now come from outside of the UK.

"The growth of the middle class in Asia...the US baby-boomer gliding into retirement and the UK population becoming more aware of its long-term savings needs, are all positive for current trading as well as longer term prospects," Hargreaves Lansdown Stockbrokers' Head of Equities Richard Hunter said.

In 2010 Prudential set out to make its units in Asia and the United States financially independent within three years, saying this would give it the option of breaking itself up if its share price did not reflect the full value of its businesses by then.

However, the recent strong performance across the group has quelled talk of an imminent structural revamp, and Prudential has played down the possibility of disposals any time soon.   Continued...

The logo of British life insurer Prudential is seen on their building, in London October 21, 2008. REUTERS/Stephen Hird