Prudential’s H1 new business profit falls 1% to US$1.47 billion

PRUDENTIAL’S new business profit – a measure of profitability for insurance businesses – fell 1 per cent to US$1.47 billion on an actual exchange rate basis for the first half ended Jun 30, from US$1.49 billion a year earlier.

The insurer on Wednesday (Aug 28) attributed the decline to high base effects in 2023 in many markets.

Excluding the effect of interest rates and other economic impacts, new business profit was up 8 per cent.

Anil Wadhwani, chief executive of Prudential, said that he was “particularly pleased” with the results, given that the insurer delivered new business-profit growth despite its “pretty exceptional” results a year earlier.

“We strongly believe that we are very well-positioned to capture the unmet demand of customers in Asia and Africa,” he noted at a media briefing on Wednesday.

Net profit for H1 fell 81 per cent to US$182 million, from US$947 million in the previous corresponding period, on an actual exchange rate basis.

The lower net profit was mainly due to short-term fluctuations from movements in interest rates.

Net profit would have fallen 80 per cent from US$924 million on a constant exchange rate basis. 

Earnings per share for H1 2024 stood at US$0.044 before adjustment to non-controlling interest, down from the prior year’s US$0.345.

The board declared a first interim dividend of US$0.0684 per share for H1, up 9 per cent from US$0.0626 previously. 

Adjusted operating profit for the period rose 6 per cent to US$1.54 billion, from US$1.46 billion in H1 2023.

Prudential’s annualised premium equivalent (APE) sales – a closely watched gauge of insurance sales – were 3 per cent higher at US$3.1 billion, from US$3 billion in the same period in the previous year, based on an actual exchange rate basis.

By geographical region, profit contributions from Singapore rose significantly by 27 per cent to US$343 million, from US$270 million previously. New business profit was up 14 per cent at US$226 million, while APE sales increased 17 per cent to US$450 million.

Prudential attributed the higher new business profit to an increase in sales volumes.

Meanwhile, it said that the growth in APE sales was due to an increased focus in investment into agency recruitment, as well as higher agent productivity – new business profit per active agent – and more active agents.

Wadhwani said: “Underpinning the growth that we saw in Singapore was the range of financial products and the offerings that we had in that market.” 

He noted growth in investment-linked products and health products in Singapore in H1. “(This underscores) the two significant trends that we see in our Asian markets: the need for savings, specifically when customers think about their retirement years, as well as health and protection,” he added.

Meanwhile, in Hong Kong, APE sales fell 7 per cent to US$955 million, while new business profit slid 3 per cent to US$651 million.

But Wadhwani pointed out that high base effects from the H1 2023 have abated as the insurer moves into the second half of the year. “Given the quality of the franchises that we have across Asia, we are very optimistic about the growth prospects in the second half of this year for the Hong Kong business.”

In mainland China, through its joint venture Citic Prudential Life, APE sales also fell 18 per cent to US$324 million and new business profit was down 33 per cent to US$115 million.

Nevertheless, Wadhwani said that the insurer has likely “started to turn the corner” in mainland China as it enters the second half of the year, as it is seeing a shift in product mix that is in line with its strategy.

He remains “cautiously optimistic” on Prudential’s growth prospects in the market, based on underlying demand drivers, such as the ageing population.

The first tranche of Prudential’s US$2 billion share buyback, which was announced in June this year, is being executed.

As at Aug 22, some 22 million shares have been repurchased for £150 million (S$258.9 million).

The company said that Asia and Africa remain as “structural drivers of growth”, noting strong demand for protection, longer-term savings and retirement propositions as markets are likely to experience broader-based economic growth.