Prudential’s £4bn profit beats expectations

British insurance giant Prudential has reported a before-tax profit of £4bn for 2015, a 22% increase on the 2014 figure.

The Pru’s UK life business saw the biggest rise, with before-tax profit of £1.17bn, a 60% increase on the 2014 figure.

The Asia life and asset management part of the business saw profit increase by 17% to £1.32bn, while the US subsidiary, Jackson, saw a 10% increase, with before-tax profit of £1.69bn. Jackson life remained the most profitable part of the business.

With a before-tax profit of £442bn, M&G, Prudential’s UK fund management business, M&G was both the least profitable and the worst performing subsidiary in the group, with profit down 1% on the previous year. Funds under management fell 7%, to £246bn, reflecting a torrid period for global markets.

The group’s full year dividend for 2015 was up 5%, at 38.78 pence per share. It also announced a special dividend of 10 pence per share, its first since 1970.

The total before-tax profit of £4bn was £200m above the expected figure of £3.8bn, as estimated by Reuters. The better-than-expected results saw the share price surge. At 11:10 am it was up 3.77% on the previous day.

Chief executive Mike Wells said the figures represented “good progress towards the 2017 growth and cash objectives” which were set out in 2013.

Of the Asian business he said: “In Asia, our portfolio of businesses remains focused on serving the protection and investment needs of the growing middle classes in the region through a high-quality agency force and well-established bank partnerships.”

He said that the huge increase in the UK life business was largely down to the £339 million from “specific management actions undertaken in the second half to position the balance sheet more efficiently under the new Solvency II regime”. He said this was “not expected to recur going forward”.

Regarding M&G’s disappointing year, Wells said: “After a period of exceptional growth, M&G had a more challenging year with retail net outflows more than offsetting positive flows from institutional new business. As a result total funds under management declined by 7 per cent to £246.1bn. Despite this, IFRS operating profit of £442m was broadly in line with last year reflecting actions on costs and cash remittances were 6 per cent higher at £302m.”

 

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