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- Prudential boss remains optimistic about firm’s new business prospects
Prudential CEO Anil Wadhwani remains optimistic
FTSE 100 insurer Prudential has blamed rising interest rates and “market fluctuations” for its sharp drop in profits.
The Asia-focused group posted a net profit of $182m (£138m) for the first half of the year, down 81 per cent from $947m in the same period a year earlier on a real exchange rate basis.
Its net profit is believed to have fallen 80 percent from $924 million on a constant exchange rate basis.
The insurer, which is based in the UK but focuses on Asian life insurance, attributed the lower net profit to changes in short-term fluctuations arising from interest rate movements.
Prudential shares It fell 0.34 percent, or 2.26 pence, to 660.14 pence on Wednesday, having fallen 30 percent over the past year.
Group new business revenue fell 1 percent year-on-year to $1.47 billion, but this compares with a strong year-on-year comparison of 45 percent new business revenue growth in the first half of 2023.
Higher volumes in Taiwan and Singapore helped partially offset broader economic challenges.
In China, regulatory changes and the current economic slowdown have dampened sales. Across China, startups’ profits fell 33%, compared with a 21% drop last year.
The group maintained its medium-term focus and its head was optimistic about the company’s new business prospects.
Chief Executive Anil Wadhwani said: ‘We have seen a pickup in sales momentum in June, which is continuing into the second half of the year.
‘Looking ahead to 2024, new venture revenues are expected to grow at an annual rate consistent with that required to meet our 2022-2027 new venture revenue growth target.
‘The structural drivers of growth in Asia and Africa for our industry remain intact, with continued strong demand for protection, long-term savings and retirement propositions as broader economic growth returns to our markets.
“We remain confident of achieving our financial and strategic objectives for 2027.”
Prudential announced a first interim dividend of 6.84 cents per share, up 9 percent from the same period in 2023.
Richard Hunter, director of markets at Interactive Investor, said: ‘There is promising evidence that Prudential is beginning to deliver on its own ambitious strategic objectives.
The group’s stated targets for 2027 are bold, including new business revenue growth of 15-20 per cent per year, but even at this early stage Prudential is confident of achieving these goals.
‘In fact, the outlook comments mention that the momentum seen so far this year is carrying over into the second half and that new business gains are in line with its targets.’
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