Prudential H1 Operating Profit Climbs On Asian Strength, Hikes Dividend

(RTTNews) - UK insurer Prudential Plc (PUK, PRU.L) reported a sharp decline in first-half pre-tax profit reflecting negative value movements and lower investment return. Operating profit, however, climbed from last year with strong Asia operations.

Group Chief Executive Tidjane Thiam said, "Prudential has produced a strong performance across our key financial metrics of IFRS operating profit, new business profit and cash during the first six months of 2013.... In Asia, our focus on meeting the needs of the fast-growing middle class of South-east Asia, combined with our allocation of capital prioritised towards regular-premium health and protection business, continued to deliver strong returns and earnings growth."

Further, the company said it has now achieved four of its six 2013 'Growth and Cash' objectives and is on track to achieve the remaining objectives of doubling Asia's 2009 new business profit by 2013 and delivering over 350 million pounds of net remittances from the UK by the end of the year.

For the first half, pre-tax profit, on IFRS basis, plunged to 720 million pounds from last year's 1.20 billion pounds. The prior year results have been adjusted to reflect adoption of new accounting standards.

Profit attributable to equity holders of the company was 365 million pounds or 14.3 pence per share, lower than last year's 887 million pounds, or 34.9 pence per share.

The company attributed the decline in profit to the negative value movements on its holdings of fixed income securities which accompany higher interest rates.

According to European Embedded Value or EEV basis, which recognizes the economic benefit of movements in investment markets, profit before tax attributable to shareholders increased 33 percent to 2.51 billion pounds.

IFRS total revenue, net of reinsurance, declined to 22.39 billion pounds from prior year's 23.36 billion pounds. Earned premiums increased from last year, while investment return declined.

IFRS operating profit, based on longer-term investment returns, climbed 22 percent to 1.42 billion pounds mainly as Asia life results were benefited by strong contributions from the company's four largest operations of Hong Kong, Indonesia, Malaysia and Singapore.

US life operating profit increased 32 percent, reflecting the company's strategic focus on fee income, while UK Life operating profit edged up 1 percent.

The company noted that the UK industry sales volumes have been affected by the implementation of the conclusions of the Retail Distribution Review. Prudential added that its UK operations remains focused on its core business of individual annuities and with-profits products.

EEV new business profit for the first half grew 11 percent to 1.27 billion pounds.

Further, the company announced a 15.8 percent increase in 2013 interim dividend to 9.73 pence per ordinary share, which will be paid on September 26.

In London, Prudential shares are currently trading at 1,213 pence, up 29 pence or 2.45 percent.