UK-based insurer Prudential Plc (PRU.L, PUK) reported Thursday a narrower loss before tax for the first half on International Financial Reporting Standards, or IFRS, basis. However, net loss widened for the period, reflecting primarily a loss on sale of its Taiwan agency business. Looking ahead, the company expects the business environment to remain difficult through the rest of 2009. On IFRS basis, loss from continuing operations before tax attributable to shareholders was GBP 76 million, narrower than GBP 102 million last year.
The company posted first-half loss attributable to equity holders of GBP 254 million or 10.2 pence per share, compared to a loss of GBP 116 million or 4.7 pence per share in the previous year.
During the period, the company recorded a loss on sale and results of Taiwan agency business of GBP 621 million. Excluding the item, the company posted first half profit of GBP 545 million, in comparison with a loss of GBP 62 million in the preceding year.
In February 2009, the company had agreed to transfer the assets and liabilities of the agency distribution business in Taiwan, including the capital consuming in-force book, to China Life Insurance Ltd., Taiwan, and completed the transaction on June 19.
Total revenue, net of reinsurance, was GBP 13.72 billion, compared to negative revenue, net of reinsurance, of GBP 373 million in the earlier year. Earned premiums, net of reinsurance, grew to GBP 9.52 billion from GBP 8.93 billion in the comparable period a year ago.
Jackson, the company's US business, reported total Annual Premium Equivalent, or APE, sales of GBP 392 million, up 10% from the prior-year period. According to the company, retail sales were the highest in any first half in its history. Jackson's New Business Profit surged 113% to GBP 292 million from the previous year. Prudential UK reported total APE sales of GBP 376 million, down 14% from last year and retail sales decreased 8% to GBP 374 million.
IFRS statutory operating profit based on longer-term investment returns, after restructuring costs, increased 6% to GBP 688 million from GBP 647 million in the same period last year, helped by higher profits from the life businesses in Asia and the UK. Operating earnings per share grew to 20.5 pence from 18.6 pence in the prior year.
New business profit increased by 25% to GBP 691 million, while new business sales on an APE basis, decreased by 8% to GBP 1.32 billion. The company noted that new business and operating profits exclude the results of the Taiwan agency business. Income from total Asian operations increased to GBP 228 million from GBP 101 million in the prior year. Total US operations generated income of GBP 219 million, down from GBP 238 million a year ago. Total U.K. operations income remained flat at GBP 432 million.
Funds under management decreased to GBP 245 billion from GBP 256 billion in the previous year.
The company also provided supplementary European Embedded Value, or EEV, results and reported a profit before tax of GBP 67 million, compared to a pre-tax loss of GBP 635 million in the earlier year. Profit for the period attributable to equity holders of the company was GBP 14 million, compared to a loss of GBP 475 million in the preceding year.
EEV operating profit based on longer-term investment returns decreased to GBP 1.25 billion from GBP 1.35 billion in the preceding year. The company said its EEV New Business profit increased 25% from last year to GBP 691 million.
In addition, the Board declared an increase in interim dividend of 5% to 6.29 pence per share, to shareholders of record on August 21, 2009, payable on September 24. Mark Tucker, chief executive said, "While we expect the business environment to remain difficult through the rest of 2009, Prudential is very well positioned to take advantage of any improvement in market conditions. The overall long-term prospects for the Group remain very positive."
PRU.L is currently trading at 516 pence, up 37.7 pence or 7.88%, on a volume of 9.32 million shares. Prudential shares have been trading in the range of 195.4 pence to 617 pence for the past 52 weeks on the LSE.
PUK closed Wednesday's regular trading at $15.87 on the NYSE.
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