Prudential's profit growth slows ahead of Thiam exit

10th Mar 2015 07:37

As it confirmed overnight stories of the departure of chief executive Tidjane Thiam, insurer Prudential released results showing growth in operating profits slowed to 14%, though this was better than the City expected.Prudential, which said it had already identified an internal successor as part of its succession planning process, saw operating profits rise 14% to £3.19bn, down from the 17% growth enjoyed in the first half and in the prior full year.Market volatility in the second half of the year resulted in new business profit growth slowing to 10% to produce £2.13bn, less than half the 24% growth from the first half and down from the 16% pace seen in 2013.Yet funds under management increased by 28% to a new high of £77.3bn thanks to large inflows at Asia asset manager Eastspring Investments, flows from its life businesses together with market movements.Presiding over his last set of results at the FTSE 100 group before he leaves for Credit Suisse, Thiam cited several challenges, including low long-term interest rates in the US and the UK, major currency discontinuities in a number of key Asian markets and unprecedented regulatory changes in the UK life market.The UK life business remained solid, with operating profit up 7% to £752 million the regulatory upheaval change affecting annuities. Yet still with-profits bonds sales increased by 34% and bulk annuities increased to £171m from £28m in 2013.Asset management arm M&G lifted operating profit 13% to £446m, growing faster than the 11% in the first half of the year, while cash remitted increased by a record 21% to £285m.Singapore-based Eastspring attracted a record level of asset inflows of £5.4bn, helping operating profit increase 32% to £90m."During the year, the group faced the depreciation of currencies in some of our Asian 'sweet spot' markets, a global investment environment where interest rates are expected to continue to remain low and geopolitical challenges which increased uncertainty, particularly in the Eurozone," Thiam said."Looking ahead, the economic environment in the US and the UK appears to show signs of improvement. Furthermore, we are optimistic about the outlook for the emerging economies of Asia, where the long-term fundamentals of our life insurance business remain compelling."