Asia profits healthy as Prudential turns towards growing markets

Prudential saw its profits rise by 4% last year, driven by its Asian business, as the 170-year-old company switches away from Europe and North America.

The insurance giant said it is still considering tapping investors for 2.5 billion to 3 billion dollars (£1.8 billion to £2.2 billion), aimed in part at attracting more shareholders in Hong Kong.

Despite its increased focus on faster growing markets in Asia and Africa – having sold or planning to sell its UK and US arms – only a small minority of its shareholders are based in Asia.

The fundraising plan, which was first floated in January, is still on the cards, Prudential said, and will also give the firm more financial flexibility.

Results from last year, published on Wednesday, demonstrate clear growth in Asia – while across the group adjusted operating profit only rose 4% to 5.5 billion dollars (£3.9 billion), its Asian business grew by 13% to 3.7 billion dollars (£2.7 billion).

The company is also making “good progress” on the demerger of its 5 billion dollar (£3.6 billion) US wing, Jackson National, chief executive Mike Wells said.

It is set to part ways with the firm in the second quarter of this year, and any fundraising would wait until after then, Prudential said.

Initial plans to float Jackson in an initial public offering, which would have raised money for company coffers, were abandoned in favour of a plan to simply hand ownership to Prudential’s shareholders.

Mr Wells said: “The proposed demerger will complete Prudential’s structural shift from a diversified global group to a growth business focusing exclusively on the unmet health, financial protection and savings needs of people in Asia and Africa.”

Speaking about the potential fundraise, he added: “As an Asia-focused company, the group believes there are clear benefits from increasing both its Asian shareholder base and the liquidity of its shares in Hong Kong.”

In 2019 Prudential demerged its UK unit, M&G, but kept a head office in London. It is dual listed in London and Hong Kong.

Mr Wells added: “While Covid-19 will continue to create social disruption and market volatility during 2021, the past year has proven our ability to operate successfully in the pandemic environment, and in various markets where social distancing rules are starting to be relaxed we are seeing a recovery in activity.

“Over the longer term, the rising prosperity of people in Asia and Africa, the scale of the unmet need for the services we provide, our leadership positions in our chosen markets and our ability to innovate at scale all give us confidence that we can continue to outperform.”