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Prudential Singapore reports strong growth in first half of 2017

Singapore

HIGHER productivity from its distribution channels has helped lift insurer Prudential Singapore's results in the first half of 2017.

Its IFRS operating profit based on longer-term investment returns for the first six months of the year came in 6 per cent higher year on year at �133 million (S$236 million).

Annual premium equivalent (APE) - a measure of new business activity - grew 23 per cent to �195 million on a European embedded value (EEV) and constant exchange rate basis. EEV provides investors with a measure of future profit streams of the insurer.

The present value of new-business premiums (PVNBP), a gauge of new-business contribution, was up 22 per cent year on year to nearly �1.5 billion.

Single-premium new sales in Singapore jumped 66 per cent to �323 million, while those of regular premium rose 16 per cent to �163 million.

At the group level, strong growth in its life businesses in Asia lifted the British insurer's IFRS operating profit by 5 per cent for the first half of 2017 to �2.4 billion, on a constant exchange rate basis.

New business profit from Asia on an EEV basis was up 18 per cent year on year to �1.1 billion, "with double-digit percentage growth or higher in eight countries, driven by improvements in both agency and bancassurance channels and by our continued focus on health and protection", the group said on Thursday.

APE sales grew 7 per cent to �1.9 billion, while IFRS operating profit in the region grew 16 per cent to �953 million, driven by growth in both life insurance and asset management through Eastspring. Free surplus generation in Asia was 15 per cent higher at �553 million.

Mike Wells, its group chief executive, said in the filings: "In Asia we offer innovative products that meet the savings, health and protection needs of the fast-growing middle class, in the United States our variable annuities are focused on meeting consumers' needs as they move into retirement, and in the United Kingdom and Europe we are responding with agility to changing consumer preferences, meeting the rising demand for savings and retirement solutions."

The group's US life insurance IFRS operating profit rose 7 per cent to �1.1 billion from the year-ago period.

In the UK, the group's life retail APE sales went up 22 per cent to �721 million, with PruFund sales up 29 per cent to �564 million.

Profit attributable to equity holders came in at �1.5 billion, more than double the �687 million a year ago. This represents earnings per share of 58.7 pence, up from 26.9 pence a year ago.

On Thursday, the group also announced the merger of asset manager M&G and its UK life insurance business, Prudential UK and Europe, to create M&G Prudential. This heightened speculation that the business is being prepared for a sale or spin off.

M&G's first-half 2017 external asset management net inflows were �7.2 billion.

"Combining these businesses will allow us to better leverage our considerable scale and capabilities. This will enable us to increase our growth prospects by providing better outcomes for our millions of customers," said Mr Wells.

The group has declared a first interim dividend of 14.50 pence per share, up 12 per cent.

Group Solvency II surplus was estimated at �12.9 billion, equivalent to a ratio of 202 per cent.