Prudential PLC’s performance has again been driven by its Asian business, where it delivered double-digit growth in operating profit, up 14 per cent to £1,198 million. Both its new business profit and APE sales were also up 10 per cent to £1,295 million and £1,978 million, respectively. Total assets under management at its Asian asset manager, Eastspring, grew 12 per cent to £169.5 billion.
Mike Wells, Group Chief Executive, said: “We have delivered a positive performance in the first half of 2019. The Group’s operating profit from continuing operations increased by 14 per cent. Our focus on key areas of operational improvement and continued investment has enabled us to drive growth and position ourselves to continue to grow profitably.”
Group operating profit from continuing operations (excluding M&GPrudential) up 14 per cent to £2,024 million.
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Demerger and move to Group-wide supervision by Hong Kong Insurance Authority
He said, “At the same time, we expect to complete the demerger of M&GPrudential in the fourth quarter of 2019, and preparations are complete for Prudential plc’s move to Group-wide supervision by the Hong Kong Insurance Authority.
“We believe that the demerger will enable both businesses to maximise their potential performance. Both will have experienced management teams better able to focus on their strategic priorities and distinct investment prospects, as well as improved allocation of resources and greater flexibility in execution.”
The demerger of M&GPrudential is set to be completed as planned in the fourth quarter of 2019, subject to shareholder approval. M&GPrudential is focused on its internal merger and transformation programme and preparing for entry to the market as a separately listed independent company.
It has also announced that it will change its name in preparation for listing to M&G plc, providing a single corporate identity while retaining its two customer-facing brands of Prudential and M&G Investments.
M&GPrudential is an asset manager and asset owner. Total funds under management grew by 6 per cent in the period to £341.1 billion.
Excerpt of the Group Chief Executive’s report on Asia: (Full report available here.)
“Our broad portfolio of life insurance and asset management businesses, high-quality products with distinctive value-added services and multi-channel strategy ensured that we continue to benefit from growing demand for the health, protection and savings solutions we provide. Our APE sales in Asia reached £1,978 million in the first half, up 10 per cent (up 14 per cent on an actual exchange rate basis), leading to growth in new business profit of 10 per cent to £1,295 million (up 15 per cent on an actual exchange rate basis).
Our multi-platform distribution in the region, with strong agency forces and bank partnerships, and growing digital channels, is continuing to drive our performance. We have continued to grow on a broad base in the region, with APE sales growth in 11 markets in the first half. APE sales in Hong Kong increased by 5 per cent to £830 million, in Singapore by 8 per cent to £231 million and in Malaysia by 3 per cent to £122 million. In Hong Kong, 63 per cent of our sales came from visitors from Mainland China.
We are also seeing a stabilisation in sales in Indonesia following the refresh of our product line and action in agency force productivity, with a strong performance in the second quarter leading to overall sales growth of 4 per cent. We have formed a strategic partnership with PT Visionet International (OVO), a leading digital payments, rewards and financial services platform in Indonesia, which we expect will enhance our reach in one of Asia’s largest insurance markets, with a population that is increasingly embracing digital tools.
Our sales through our joint venture, CITIC-Prudential, are up 45 per cent in the half year to £270 million, and we have received approval to open our 20th branch in Mainland China, in Shaanxi province. Through our joint venture, we now have a comprehensive network of 231 sales offices in 89 cities, with access to regions accounting for 80 per cent of Mainland China’s GDP.
Our Asian asset manager, Eastspring, has grown operating profit by 12 per cent, supported by disciplined expense management and the acquisition of TMB Asset Management in the second half of 2018. Its assets under management grew to £169.5 billion, with positive external net flows in the first half of 2019 of £3.1 billion, excluding money market funds (2018: net outflows of £0.9 billion on an actual exchange rate basis), driven by strong retail bond flows in Thailand and equity flows in Korean pensions.
We are continuing to develop our distribution reach in Asia, including through the renewal of our successful regional strategic bancassurance alliance with United Overseas Bank Limited, through which APE sales increased by 27 per cent in the first half. To ensure that we provide our solutions as widely as possible across the region, we have also been actively tailoring our propositions to suit digital sales channels. In the first half of 2019 we have activated our partnership with O bank, our digital bank partner in Taiwan, and will look to build on this success through UOB’s new digital bank, TMRW.
We are continuing to build partnerships in Asia in a number of areas. We are committed to improving access to healthcare, and have launched Pulse by Prudential, a digital health app that is the first of its kind to offer holistic health management to consumers. The health technology and services company Tictrac has become one of our partners in Pulse, joining Babylon Health as part of our health ecosystem. Earlier this month, we also announced partnerships with Halodoc, Indonesia’s homegrown healthcare startup, to help deliver digital solutions that will meet a critical need for affordable and accessible healthcare, and with MyDoc, which offers consumers access to health services on their mobile phones. Following its launch in Singapore in 2018, we expanded PRUworks, our digital ecosystem designed to help small and medium-sized enterprises (SMEs) grow their businesses, to Indonesia. We have also entered into an agreement with specialist technology provider H?lthTech, whose cloud-computing technology will be integrated into PRUworks and will facilitate the platform in offering one-stop access to insurance products, employee benefits and business services to small and medium-sized enterprises across Asia. At the same time, we are making good progress with our tailored offering for high net worth clients in Singapore, Opus by Prudential, which is designed to address the unfulfilled wealth protection needs of this fast-growing sector. All of these initiatives enable us to offer improved services to more customers.”
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