Prudential H1 Profit Climbs, Says Confident Over Longer Term; Stock Rises

(RTTNews) - UK insurer Prudential Plc. (PRU.L, PUK) reported Tuesday higher profit in its first half, with strong performance from all of its regions, despite challenging market conditions. Looking ahead, the company said it is making progress towards the 2017 objectives, and that it remains confident in its ability to produce profitable growth over the long term. The shares were gaining around 3 percent in the morning trading in London.

For the first half, pre-tax profit, on IFRS basis, attributable to shareholders surged 181 percent to 1.42 billion pounds from last year's 506 million pounds.

On European Embedded Value or EEV basis, post-tax profit attributable to shareholders edged up 1 percent to 1.934 billion pounds.

Basic earnings per share on IFRS basis rose 7 percent to 45.2 pence, and on EEV basis grew 7 percent to 76.3 pence. Long-term business operating profit before tax, on IFRS basis, grew 10 percent year-over-year to 1.543 billion pounds. Long-term business post-tax operating profit on EEV basis increased 9 percent to 1.997 billion pounds.

The company said it has delivered double-digit growth across three key metrics of IFRS operating profit, new business profit and cash with all four of its business units delivering a strong performance. This was despite challenging conditions including macroeconomic concerns in South-east Asia and significant disruption to the UK life market.

At constant exchange rates basis, IFRS operating profit based on longer-term investment returns increased 17 percent to 1.521 billion pounds. On the same basis, EEV new business profit grew by 24 per cent to 1.015 billion pounds.

New business profit was up 24 percent at 1.015 billion pounds, driven by a combination of higher volumes and pricing and product actions to increase profitability. The company noted that all three life businesses made strong contributions, with 15 percent rise in Asia, 31 percent growth in the US and a 45 percent increase in the UK.

Sales - Annual Premium Equivalent or APE rose 17 percent to 2.3 billion pounds from last year's 2.0 billion pounds with double-digit growth from Asia, US and the UK. APE sales comprise regular premium sales plus one-tenth of single premium insurance sales.

Life APE new business sales increased 6 percent on a reported basis, and 17 percent at constant currency.

Further, Prudential said its Board has approved a 2014 interim dividend of 11.19 pence per share, an increase of 15 percent over 2013.

The Group Objective for Underlying Free Surplus Generation for cumulative period January 1, 2014 to December 31, 2017 is 20 billion pounds. This is compared to recorded Underlying Free Surplus Generation of 1.2 billion pounds from January 1 to June 30, 2014.

Group Chief Executive Tidjane Thiam said, "Looking ahead, outside the Eurozone, which continues to grapple with significant, unresolved economic and political challenges, GDP growth is forecast to accelerate in the US and the UK. Growth in the emerging economies of Asia is expected to continue outpacing growth in the advanced economies."

According to the firm, Asia remains core to its long-term growth and profitability prospects.

In London, Prudential shares were gaining 34.50 pence or 2.58 percent, and trading at 1,373.50 pence.

In pre-market activity on the NYSE, the shares were gaining 3.35 percent at $46.21.