Prudential stays on track despite tougher trading in China and Hong Kong
The Asia-focused group reported a 3% fall in new business profit across Hong Kong and a 33% decline in mainland China.
Insurance giant Prudential has revealed a drop in new business profit after tougher trading in its key markets of Hong Kong and China.
The Asia-focused group reported a 3% fall in new business profit – an important gauge of future earnings for insurers – across Hong Kong, its biggest region, to 651 million US dollars (£492 million) in the six months to June 30.
Its mainland Chinese joint venture also suffered a 33% decline in new business to 115 million US dollars (£87 million).
The performance across China and Hong Kong dragged down its overall new business profit result for the half-year, down 1% to 1.47 billion US dollars (£1.11 billion), when taking exchange rate movements into account.
The out-turn marks a sharp reversal of trading in Hong Kong, which was boosted a year earlier after the removal of Covid restrictions and the opening of the border with mainland China.
The group – which is listed in Hong Kong and London – said it had “taken steps to reposition our business in the Chinese mainland ahead of both regulatory and macro-economic changes”, while it insisted it is on track with 2027 new business profit goals.
Pru said it had seen a “pick-up in sales momentum” in June that has continued into the second half so far.
We entered this year with a clear strategy and a set of outcomes we are confident in achieving by 2027
Chief executive Anil Wadhwani said: “We entered this year with a clear strategy and a set of outcomes we are confident in achieving by 2027, namely a compounded annual growth rate for new business profit of 15 to 20% and double-digit for cash generation, both measured from a 2022 base.”
The group added: “The structural drivers of growth in Asia and Africa for our industry remain intact, with ongoing strong demand in respect of protection, long-term savings and retirement propositions as broader-based economic growth returns to our markets.
“We continue to be confident in achieving our 2027 financial and strategic objectives.”
The results showed that underlying earnings lifted 6% including exchange rate movements to 1.54 billion US dollars (£1.17 billion).
Analysts at Jefferies said it is reassuring that Pru has seen a recent pick-up in sales momentum.
Shares in Pru lifted 2% in Wednesday morning trading as it also announced a 9% rise in its interim dividend payout.
The group confirmed it had bought back just under 200 million US dollars (£151 million) of shares under its two billion US dollar (£1.5 billion) buyback plan that was announced in June.