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Prudential FY17 Profit Up, Hikes Dividend; To Demerge M&G Prudential; Stock Up

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Shares of Prudential plc (PRU.L) were gaining around 5 percent in London trading after the UK-based financial services group reported Wednesday higher profit in its fiscal 2017 with increased premiums and strong growth in Asia. The company also lifted its dividend.

Separately, the company announced its intention to demerge UK & Europe business, M&G Prudential, resulting in two separately-listed companies, each with its own distinct investment prospects. M&G Prudential also announced the sale of 12 billion pounds of UK annuity portfolio to Rothesay Life.

Commenting on the results, Mike Wells, Group Chief Executive, said, "Our clear, consistent strategy, high-quality products and constantly improving capabilities have enabled us to deliver excellent progress across the Group, led by double-digit growth in our Asia business. We have also achieved all of our 2017 objectives, which we set in December 2013. This represents the third set of objectives successfully achieved within the last 10 years."

For fiscal 2017, Prudential's profit before tax grew to 3.97 billion pounds from last year's 3.21 billion pounds. Earnings per share were 93 pence, higher than 75 pence last year.

Group IFRS operating profit of 4.70 billion pounds grew 6 percent. In Asia, the company reported double-digit broad-based growth in new business profit of 12 percent. Asia life businesses' operating profit was up 15 percent.

Total revenue, net of reinsurance, was 86.56 billion pounds, up from 71.84 billion pounds a year ago. Gross premiums earned improved to 44.01 billion pounds from 38.98 billion pounds last year.

Earned premiums, net of reinsurance, went up to 41.94 billion pounds from 36.96 billion pounds last year.

In the US, life business Jackson delivered positive separate account net inflows of 3.5 billion pounds, with separate account assets increasing by 19 percent.

Further, the company announced that full-year 2017 ordinary dividend increased by 8 percent to 47 pence per share.

Regarding its demerger plans, the company said that M&G Prudential will become a capital-efficient UK & Europe savings and investment provider, while Prudential plc will be an insurance group focused on high-growth opportunities in Asia, the US and Africa. On completion of the demerger, shareholders will hold interests in both Prudential plc and M&G Prudential.

In preparation for the UK demerger process, and to align the ownership of the company's businesses with their operating structures, Prudential plc intends to transfer the legal ownership of its Hong Kong insurance subsidiaries from The Prudential Assurance Company Limited to Prudential Corporation Asia Limited, which is expected to complete by the end of 2019.

In London, Prudential plc shares were trading at 1,932 pence, up 5.83 percent.

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