Prudential bounces back as Asian growth fears recede

Prudential shares have recovered from a 4.1% fall earlier in the day after analysts took on board what the insurer was saying about its high growth Asia business.

Barrie Cornes, analyst at Panmure Gordon, said that Prudential shares dived in early trading because some analysts were not prepared for the fall in Asian business margins.

New business sales in Asia over the first half of 2008 grew by 14% compared to 48% over the same period a year ago.

He said that analysts should have expected Asian margins for the first half of 2008 to be lower because sales in 2007 were boosted by a successful marketing campaign called 'What's your number?, which led to the best ever results for the region. This years' results were still the second best, said Cornes. 

'If you had actually done some joined up thinking, you would have woken up and thought these aren't disappointing,' said Cornes. 'People have realised that these results are pretty good.'

Prudential reported a 7% rise in first-half operating profit and 18% rise in new UK business under ‘difficult’ market conditions in the the six months to 30 June.

Over the same period new retail sales in the UK grew by 11% on an annual premium equivalent (APE) basis, while new business profits were up 19% on the first half of 2007 to £129 million.

The group also confirmed that it had completed a £300 million deal to reinsure around half of the pension liabilities of the Rank pension scheme, which had previously been bought out by Rothesay Life.

Meanwhile a Prudential spokesman said that the firm would launch its UK variable annuity proposition in the first half of 2009 – contrary to reports of a launch later this year.

Overall, group new business sales were up 12% to £1.5 billion, while new business profits were up 11% to £602 million on a European embedded value basis.

There was also strong performance in the asset management business, with overall net inflows of £4.1 billion.

M&G reported a first half operating profit of £146 million and had net inflows totalling £2.4 billion, pushing funds under management to £51.7 billion from £51.2 billion in 2007.