Prudential third quarter well ahead of expectations

18th Nov 2014 08:23

Boosted by a strongly improved performance in the UK life business in the third quarter, Prudential's new business profits were well ahead of expectations for the year-to-date.In the nine months to 30 September, group new business profits rose 17% at constant exchange rates to £1.5bn, or up 6% on an actual exchange rate basis. The consensus of analyst forecasts had pointed to £1.483bn.Chief executive Tidjane Thiam said: "We have seen strong contributions across the group, with year-to-date double-digit growth in both new business profit and new business annual premium equivalent (APE) sales in each of our three life insurance businesses in Asia, the US and the UK, and net inflows of £9.6bn in our asset management businesses."New business profit at the UK life business increased 28% to £209m, ahead of the £190m forecast, with retail APE sales are nearly at the same levels as last year, despite the government's huge upheaval of the individual annuity market, and six bulk annuity transactions in the wholesale market reaping £880 of profits.The UK's retail performance, said Thiam, reflected increased appetite from individual investors for Prudential savings and investments products, particularly with-profits bonds.M&G had a good quarter, with third party net inflows of £5.9bn year-to-date, with external funds under management up 8% as continental Europe continues to drive growth.In Asia new business profit increased 15% to £775m, ahead of the £760m expected, driven by APE sales growth of 14% as a well diversified business by country, product and distribution channel enabled continued growth despite short-term challenges in some of the key countries in the region."Our long-term growth potential in the region is strong, underpinned by favourable structural dynamics in our chosen markets," said Thiam.In the US, the Jackson National Life Insurance arm lifted new business profit 16% higher at £530m as new business volumes were managed within the annual risk appetite and diversification made to the product mix.Thiam said the US market reflected "attractive product economics in our traditional variable annuity business and increased contribution from Elite Access".Analysts were impressed, with Shore Capital's Eamonn Flanagan lauding the "powerful" new business performance as both new business volumes and profits were ahead of expectations and towards the top end of market forecasts."At an underlying level, the figures bear testimony to the strength of Prudential's worldwide positioning in the key markets of Asia, the US and the UK and its continued focus on capital efficiency and profitability over volumes," he said. "In turn, we should witness the latter translating into excellent delivery of both IFRS profitability and cash with shareholder ultimately benefiting via dividends."