UK insurer Prudential Plc (PUK, PRU.L) reported Wednesday that its fiscal 2012 profit climbed from last year benefited by improved performance in Asia and US regions as well as significantly higher investment returns. The company also announced a 15.9 percent increase in dividend.
Looking ahead, Chief Executive Tidjane Thiam said, "Although the outlook for global growth has seen some modest improvement in recent months, a high level of uncertainty remains. Like other insurance companies we face the challenge of persistently low long-term interest rates."
Despite this, the company expects to continue to deliver relative outperformance, citing its strong balance sheet, having high-quality franchises and market-leading distribution in Asia in some of the fastest growing and most profitable markets, as well as market-leading positions in the US and the UK, with a strong asset management proposition.
In the year 2012, pre-tax profit, on IFRS basis, climbed 54 percent to 2.81 billion pounds from last year's 1.83 billion pounds. Profit attributable to equity holders of the company grew to 2.20 billion pounds or 86.4 pence per share from 1.42 billion pounds or 55.7 pence per share a year ago.
The company attributed the improvement mainly to a 25 percent increase in operating profit based on longer-term investment returns, led by Asia and the US, and the positive investment market returns earned in the year.
According to European Embedded Value or EEV basis, pre-tax profit attributable to shareholders, including actual investment returns, jumped 72 percent to 5.02 billion pounds on higher operating profit, improved markets and the gain posted on the acquisition of REALIC.
The company noted that its insurance businesses in Asia, the US, and the UK, have delivered a 14 percent increase in new business profit to 2.45 billion pounds with a distinctive 18 percent increase in Asia.
Net asset value per share was 405 pence, compared to 336 pence a year ago.
Total annual revenue, net of reinsurance, was 55.48 billion pounds, an increase from 36.51 billion pounds a year before. Gross premiums earned increased to 29.91 billion pounds from 25.71 billion pounds last year. In the year, investment return was 24.05 billion pounds, significantly higher than last year's 9.36 billion pounds.
In Asia, the improved performance has been largely driven by the company's 'sweet-spot' markets including Indonesia, Singapore, Malaysia, the Philippines and Thailand.
US life insurance business Jackson continued to deliver profitable growth with total IFRS pre-tax operating profit climbing 48 percent. Jackson delivered a 14 percent increase in APE retail sales.
The UK business produced a strong performance in a difficult market helped by increased sales of annuities and with-profits products, ahead of the implementation of the conclusions of the Retail Distribution Review.
Further, the company said its Board has decided to rebase the annual dividend upwards by 4 pence, reflecting higher results, strong progress in free surplus generation of the business and in the delivery of financial objectives. In line with this, the directors recommend a final dividend of 20.79 pence per share, bringing the total dividend for the year to 29.19 pence, representing an increase of 15.9 percent over 2011.
In London, Prudential shares are currently trading at 1,059.70 pence, up 30.70 pence or 2.98 percent.
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