Prudential H1 operating profit up 8% to US$1.7b as sales recover 

ASIA-FOCUSED insurer Prudential on Wednesday (Aug 10) posted an adjusted operating profit of US$1.7 billion for the half year ended Jun 30, 2022, led by gains in the group’s life and asset management segments.

Adjusted operating profit was up 8 per cent on a constant exchange rate basis, and up 6 per cent on an actual exchange rate basis, compared with the US$1.6 billion recorded in the year-ago period.

“It’s a resilient set of results, and I think it demonstrates our execution capability, even in these extraordinarily volatile operating and market conditions,” said Prudential’s group chief executive Mark FitzPatrick, at an earnings call following the release of the results.

Annual premium equivalent (APE) sales - a measure of new business activity - were up 9 per cent in the period to US$2.2 billion, as conditions started to normalise in most markets. (see amendment note)

New business profit, however, was 5 per cent lower as higher interest rates and differences in geographical and channel mix weighed.

The company noted that 9 of its 12 Asia life markets, as well as its Africa business, saw growth in the period. Prudential’s life insurance business in mainland China, Citic Prudential Life (CPL), posted APE sales growth of 13 per cent, and Singapore APE sales were up 5 per cent.

APE sales for Prudential’s growth markets segment also rose 24 per cent, with Taiwan, India, Vietnam and Africa delivering double-digit growth. 

Meanwhile, Indonesia APE sales fell 5 per cent and Malaysia was down 15 per cent. In April, the company set up a dedicated, standalone Syariah entity in Indonesia, Prudential Syariah, in its attempt to penetrate further the Syariah market.

As for Hong Kong, APE sales fell 10 per cent, while new business profit for the market declined 31 per cent.

FitzPatrick noted that new business profit in Hong Kong fell largely due to rising interest rates, with sales just marginally down due to the fifth wave of the Covid-19 pandemic in the territory in the first half of the year. “That’s actually a very critical performance with the Hong Kong team,“ FitzPatrick said.

Excluding the effect of interest rates and other economic changes, new business profit was “broadly flat” compared to the year before, the London and Hong Kong dual-listed company noted.

Prudential’s board has declared a first interim dividend of US$0.0574 per share, up 7 per cent from US$0.0537 in the same period a year earlier, and equating to about one-third of the previous full-year dividend of US$0.1723.

After the record date on Aug 19, the dividend will be paid on Sep 27 for Hong Kong, UK and ADR (American depositary receipts) holders and Oct 4 for Singapore shareholders.

FitzPatrick expects Prudential’s diversification across geographies and markets, products and distribution platforms to provide a long-term growth trajectory for the company. The pandemic should also continue to raise awareness of and demand for financial protection and health care, he added.

Amendment note: A previous version of the story incorrectly stated that APE sales for the period were US$2.2 million when it is in fact US$2.2 billion. The article has been amended to reflect this change.