Prudential eyes growth in India as it posts 2% decline in new business profit for FY2024
New business profit in Singapore is up 15%, underpinned by 11% increase in annual premium equivalent sales
[SINGAPORE] Prudential is betting on India in search of growth, aiming to expand its business in the world’s fifth-largest and fastest-growing economy.
“India is a strategic market, and we are looking at opportunities to grow both our life as well as health businesses,” said chief executive officer Anil Wadhwani during an earnings call after the release of its 2024 financial year results on Thursday (Mar 20).
Wadhwani also highlighted Prudential’s focus on “looking at opportunities to create shareholder value”, particularly given the current state of Indian capital markets. One such opportunity includes the potential listing of its Indian joint venture, ICICI Prudential Asset Management, which will involve the partial sale of its shares. The transaction is subject to market conditions, requisite approvals and other considerations.
“We have intentions to return the net proceeds to our shareholders,” he said, noting that Prudential cannot comment on the timeline for this listing due to regulatory restrictions, but will provide updates at an appropriate time.
The comments came as Prudential on Thursday announced a joint venture with India’s HCL Group’s promoter company Vama Sundari Investments (Delhi) to operate a standalone health insurance business.
Prudential will hold a 70 per cent stake in the joint venture, and Vama will hold the remaining 30 per cent. The joint venture is subject to obtaining regulatory approvals.
Wadhwani emphasised that Prudential’s strong partnerships with HCL and ICICI are key drivers in making the “India story compelling and exciting for Prudential”.
Tapping India’s healthcare demand
Wadhwani sees two key trends that make it an ideal time for Prudential to enter India’s health insurance market now.
The first one is the growing consumer concern over healthcare costs, particularly significant out-of-pocket expenses that many Indians face when accessing healthcare. This financial burden, he believes, creates a substantial opportunity for Prudential to leverage its expertise, product innovation, and deep knowledge of the Indian market.
“There is enough and ample room for us to be able to deliver a unique customer experience,” he said, noting that the healthcare experience in India is often fragmented.
Prudential’s joint venture company is expected to be led by industry veteran Amar Joshi. It aims to address the growing healthcare needs of the Indian consumer, and contribute to the Indian government’s vision of having “Insurance for All by 2047”.
Wadhwani added: “India’s growing economy, population and middle class create significant opportunities for growth in its insurance market, especially in the health, savings, protection and retirement sectors.”
Shikhar Malhotra, executive director of Vama, noted that the partnership leverages mutual synergies. “Through this collaboration, we aim to advance our common mission to enhance access to quality health insurance and drive greater penetration across the country.”
Double-digit growth
For FY2024 ended December, Prudential reported a 2 per cent decline in new business profit to US$3.08 billion, from US$3.1 billion in the prior year.
On a constant exchange rate basis, the new business profit would have been up 11 per cent.
Prudential noted that 14 markets achieved double-digit year-on-year growth in new business profit, led by Hong Kong, Singapore and Taiwan.
In Singapore, new business profit for FY2024 grew 15 per cent, underpinned by an 11 per cent increase in annual premium equivalent (APE) sales.
The new business profit for the health segment increased to US$346 million, led by growth in Hong Kong, Singapore and Indonesia.
The agency channel delivered new business profit of US$1.9 billion, a decline of 9 per cent on the year.
Bancassurance new business profit rose 10 per cent to US$872 million, supported by sales growth and positive product-mix effects.
Overall, profit for FY2024 rose 41 per cent to US$2.4 billion, from US$1.7 billion in FY2023. On a constant exchange rate basis, profit would have been up 43 per cent.
Creating shareholder value
Commenting on the results, Wadhwani pointed out that the long-term growth trends inherent in Asia and Africa are reasserting themselves, creating significant opportunities for the insurer.
He added: “Insurance penetration rates in Asia are low and there is continued, and growing, demand for long-term savings and protection products across our markets, alongside a need for wealth management and retirement planning, particularly in our higher income Asian markets.”
Prudential’s directors approved a second interim dividend of US$0.1629 per share. This brought its full-year dividend to US$0.2313 per share, up 13 per cent compared with FY2023.
As at Mar 14, Prudential completed US$1 billion in share buybacks under its US$2 billion share buyback programme announced in June last year.
“This programme is now expected to complete by the end of 2025 rather than our original guidance of mid-2026,” it noted.
Shares of Prudential ended Thursday flat at US$8.21 on the Singapore Exchange.
